Casino Stocks Got Good News, but Investors Remain Wary
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The stock market started the week on the wrong foot. The Dow Jones Industrial Average, Nasdaq Composite and S&P 500 all dropped about 1.5%. Casino stocks have been hit hard over the past three years due to the ongoing impact of the COVID-19 pandemic. Over the weekend, many major casino resort companies got good news from a key governmental regulator.
Melco Resorts & Entertainment (MLCO 9.86%) has a lot of exposure to Macao. On Monday, the government of Macau gave six companies provisional gambling licenses to continue operating there. Melco saw the biggest gains, rising 10%. Wynn posted a 4% rise. Las Vegas Sands didn't get as big a lift, as its stock climbed just 1%.
All four U.S.-listed stocks with a renewed license to operate in Macao are positive for investors. However, the company still faces challenges. There are an uptick in COVID-19-related lockdowns in China and there are more protests in the country. Travel to Macaon could be affected, even though the gambling capital has recently taken steps to loosen COVI restrictions for visitors.
MGM reported strong revenue from its Las Vegas Strip properties in the third quarter. However, sales at its MGM China unit dropped 70% year over year. Las Las Sands divested its former Strip holdings in 2021 to favor its international opportunities. Macao's reopening is vital for shareholders to claw back their losses since 2019.
