Wynn Resorts(NASDAQ: WYNN) is an American operator of high-end casinos and resorts. The company has a firm presence in both gaming capitals of the world, operating 3 hotels in Macau and 2 hotels in Las Vegas. The company has built a strong brand as it is the highest-grossing gaming operator in both Las Vegas and China.
The company’s stock had been a market darling after nearly tripling between 2016 and 2018 after which a string of internal scandals pushed it down by nearly 50%. At the center of the scandal was founder, CEO and Chairman Steve Wynn who was accused of various sexual misconduct allegations (NPR). As a result, he was asked to step down from the board following which the company started to gain back lost ground. The stock came into 2020 with a great outlook owing to an expected increase in Asian gambling, but no-one in the industry expected the spread of the coronavirus pandemic and what it would do to the economy.
The pandemic has arguably had the worst effect on the travel on entertainment sectors as they both involve huge gatherings of people and social settings of close proximity. In February, the company had to completely shut down its operations in China for 15 days and in March they had to shut down their Vegas operation for nearly 8 weeks to curb the spread of the virus (FoxBusiness).
This was an extremely harmful set of events for the company as not only did it generate no revenue but also the lockdowns came at one of the most lucrative seasons of the year. Since the coronavirus started on its global contamination spree, Wynn stock is down 45% YTD after going down as much as 71%.
On Wednesday, the company reported it’s Q1 2020 earnings and pushed the stock down another 2.8%. The company reported an EPS of -$3.54 against revenues of $953.7 million, both missing analyst projections. The biggest letdown from the earnings was the worse than expected performance of the Chinese locations. Wynn Palace posted revenues of $259.5 million(64% down YoY) while Wynn Macau posted revenues of $229.5 million, down 52% YoY.
Investors had better expectations from the Macau resorts as they reopened on the 20th of February (BW). Management explained the under-performance was due to lower travel volumes and operations at deliberate under-capacity for social distancing. The company reported cash reserves of $2.89 billion against a debt of $11.37 billion. The company also announced the suspension of its quarterly dividend in order to maintain sufficient liquidity.
Wynn Resorts, Limited (NASDAQ: WYNN) stock price is slightly up on Thursday but it should go even further on positive signals from Las Vegas. Wynn Resorts CEO, Matt Maddox ,announced that the company will probably reopen both its Strip resorts together at a limited capacity.