Las Vegas Sands is a big casino operator that is currently having a tough year. This is nothing unusual, as most casino operators are in the same boat, especially the ones in Macau. However, Sands had a particularly bad month and saw a price stock drop of 14 percent.
This happened after the slowdown in the VIP gambling market from China, as well as a big lawsuit the operator is engaged in. This is the latest in the series of stock price retreats for many Macau and Las Vegas casinos. Now, Sheldon Adelson’s company stock got downgraded to Hold instead of the previous Buy designation. Analysts also believe that the company will continue to miss its quarterly goals.
This already occurred for the second-quarter goals and earning predictions are not good. Its EBITDA was well over $20 million short than the expected sum. The $2.14 billion in revenue is also 10 million short compared to the expectations.
The company is looking at a mixed picture when it comes to getting back into the green. In its Las Vegas properties, the non-gaming offer of retail centers, hotels, and convention should boost its revenue. These have performed well when it comes to offsetting the weak gambling market.
At the same time, Las Vegas Sands is certain that they will see even less wealthy high rollers from China traveling to Macau. As the pressure on the economy in mainland continues and Beijing is not able to quell fears, the VIP market will steer clear of casinos. All of this is a big problem for the Macau side of the Sands operation.
Here, the operator invested a lot of money, time and resources to build up its offer. Now, the investment is clearly not paying off and what is even worse, it is slinking towards even weaker performances. With a range of facilities it has in the enclave, Sands doesn’t even have an easy scaling-down process at its disposal.
The impact on the company’s share price was inevitable. The analysts are not unanimous where this will go in the future, but most agree that Sands desperately needs to see rising revenue in Macau. For this to happen, the Trade war needs to get a quick and effective resolution. Otherwise, the Las Vegas Sands facilities in Macau have to brace for even stormier seas, just like its stock.
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