Wynn Resorts Shares Got Crushed: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: The casino sell-off continued as shares of Wynn Resorts (NAS: WYNN) fell as much as 11% during trading today.
So what: The fear about a slowdown in China is the new hot-button issue, and gaming stocks with exposure to China are taking it on the chin as a result. Wynn, Las Vegas Sands (NYS: LVS) , and Melco Crown (NAS: MPEL) are highly dependent on Macau gaming, and in turn China, for revenue so if China does slow it's not a good thing for them.
Now what: Like I said yesterday, this "slowdown" needs to be put into context. Growth has been accelerating throughout 2011 and reached its peak of 57% last quarter. So a slowdown isn't the end of the world.
I will also point out that the "experts" predicted Macau's gaming revenue would grow just 20% earlier this year only to raise the estimate to 30%, a number Macau will easily crush. With gaming stocks now trading at low enterprise value/EBITDA multiples compared to earlier this year, I think these stocks are ripe for the picking.
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At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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