People bet on the Las Vegas recreation – just look at the stock prices of local casino companies for proof.
After a nosedive in early 2020, casino operators’ share prices are close to – if not more – before the pandemic. Industry experts say this is a sign that investors believe that the introduction of vaccines and improvements in COVID-19 case numbers will result in more pedestrian traffic in the city in the coming months.
“I would sum it all up under one word: hope,” said Craig Johnson, chief market technician for Piper Sandler, Minneapolis, of the rally. “The market is a predictive mechanism that is expected six to nine months in advance. And I think the stocks of these companies are a leading indicator and certainly reflect more needles going into your arms. “
The stock market got off to a strong start in early 2020, but with the outbreak of the pandemic and the closure of the casino, things collapsed.
Caesars Entertainment Inc. stocks fell 88 percent between January 2 and March 18, the day after the Nevada casinos closed. Red Rock Resorts Inc. fell 85 percent during the period, and Wynn Resorts Ltd. fell 70 percent.
Johnson said the numbers really turned around in mid-November after Pfizer and BioNTech said their COVID-18 vaccine was more than 90 percent effective.
The Dow Jones Industrial Average rose more than 800 points on November 9 after positive vaccine news. Wynn and MGM Resorts International saw the most significant gains that day among the state’s six largest public casino operators. Wynn closed 27.7 percent and MGM closed 14.9 percent.
From there, stocks continued to rise.
As of Tuesday, four of the six states’ six largest public casino operators – MGM, Caesars, Red Rock, and Boyd Gaming Corp. – exceeded the share prices not seen since January 2020. Wynn and Las Vegas Sands Corp. are 12 and 13 percent below their January peaks.
“Once things really open up again, I think Vegas will be a clear destination that people want first,” said Johnson. “The rally in the stock price really just reflects the hope that things will reopen and people will go on vacation and have an experience in Las Vegas.”
Casino company stocks are following a trend seen in the larger travel and tourism industries.
Norwegian Cruise Line, United Airlines, Boeing and Royal Caribbean Cruises were among the top movers in the S&P 500 index on Tuesday.
Johnson said there is “clearly” an emphasis on the entertainment space among investors. He cited Boyd Gaming as an example, which closed Tuesday at $ 60.42 – an all-time high.
“This has been a beautiful uptrend coming off those lows,” said Johnson. “It’s a sign that there is a demand – they’ll put more money in casinos.”
Clyde Barrow, a games industry expert and professor at the University of Texas, Rio Grande Valley, said the price movements are a sign that people in the US are expecting a 70 percent vaccination rate by the end of the summer, which would be a huge blessing to Las Vegas casinos and resorts.
It’s impossible to tell if this uptrend will continue – the stock market is known for its volatility – but Barrow said all signs point to continued growth.
“In the long run (the stock market) rises. I would assume that it will most certainly stay that way as we are really at the bottom of the business cycle, ”he said. “With the introduction of the vaccine, everyone is expecting an economic recovery. … We will only see a general upswing in the business cycle over the next few months. “
The review journal is owned by the family of Sheldon Adelson, the late CEO and chairman of Las Vegas Sands Corp.
Contact Bailey Schulz at [email protected]. consequences @bailey_schulz on twitter.