Today, casino resort developer Wynn fell 6% after releasing Q2 earnings. Wynn beat estimates for revenue and earnings however the stock still dropped significantly. The price drop is explained as "mass market softness", does anyone know what this means and how it impacted the price so heavy. Wynn has shown strong growth this year with new properties and have been expanding their Macau business. In addition, Wynn offers a decent dividend of 1.44%. Here are some articles: Article 1 Article 2
- Does anyone know why the market reacted to negatively to Wynn's quarterly reports?
The Key will always be in the future outlook... so with Wynn what I'm seeing is that VIP's in Macau drove a lot of their profit and for some reason, the market doesn't like that so 6% drop. Does it make perfect sense? No, markets aren't perfect. Is it a buy after the drop, not in my opinion, at least not now.
Mass refers to non-VIP / non-junket / unrated players. A higher ratio of mass to VIP is always better, because your mass patron bets smaller hands and revenue from these guys isn't subject to the same level of volatility as VIP. With VIP (i.e., "whales"), it's not uncommon for one guy betting $100k hands to take the house for $5 million in one month on baccarat.
And no, for WYNN to trade down on Q2 earnings (and LVS trading down only 1% after hours on a worse report right now) doesn't make sense, especially when mass softness can be expected due to access issues at the Cotai property. If anyone thinks equities are overvalued right now, gaming stocks are especially loopy. Look up SGMS's Q2 report and market reaction to see what I'm talking about.
Thanks for the insight, I'm not too familiar with the terms used in the casino market
y'all are thinking too high level. an overheated low vol market will do this. companies who miss earnings get crushed, companies who beat earnings hardly get rewarded. it's how valuations come down outside of a crash.
Good point and I don't disagree, but as someone who thinks more like a gaming operator than a trader or analyst I'm still trying to make sense of SGMS's movement. Released before market open on Monday and right now trading 40% up from where they were last week and almost all analysts covering them have moved their goalposts, on a modest beat but I guess more importantly, "we're thinking about refinancing our debt." They've been highly leveraged for some time, but seems insane to me to price in some nebulous management intention (regarding something that should already have been assumed to be on the table anyway) to such a degree.
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