Why Empire Resorts Inc. Stock Popped and Dropped Today
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: Shares of gaming company Empire Resorts jumped as much 10% in early trading today before dropping to a loss and ending the day over breakeven.
So what: The crazy moves came after Empire announced it had submitted a proposal to the New York State Gaming Facility Location Board for a casino in Sullivan County. The proposed project would cost over $1 billion, with $630 million coming from Empire and its partners.
This creates an incredible growth opportunity, but it will also require new capital. Management also announced a $478 million senior secured credit facility from Credit Suisse that is subject to getting the gaming license, as well as up to $150 million in new equity. Kien Huat Realty III, Empire's largest shareholder, has already committed to buying a proportionate share of the offering if new stock is sold.
Now what: New York is looking to expand its gaming offerings; Empire and Caesars Entertainment both announced project proposals there, so it'll be a competitive market. The news of Caesars' bid or the dilution that came with Empire's bid may have scared away investors from the early pop today, which is understandable. In a highly competitive market, I don't think Empire is in a good position with or without the new casino, so I'd be a seller today. It'll take years to see whether Empire wins the bid and can build a profitable resort, which is easier said than done in the Northeast.
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The article Why Empire Resorts Inc. Stock Popped and Dropped Today originally appeared on Fool.com.Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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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