US casino stocks were beaten bloody on Wednesday, the day after Nevada’s governor shut down the state’s entire land-based industry and the COVID-19 coronavirus continues its relentless march across the US of A.
Regional casino operator Penn National Gaming (PNG) took the biggest hit on Wednesday, as its shares closed down over 38% from the day before to $4.52. The shares were trading at over $38 as recently as February 20, following PNG’s blockbuster deal for media property Barstool Sports.
Fast forward to this Tuesday and PNG informed investors that it was borrowing the remaining $430m available under its Revolving Credit Facility “to ensure it maintains ample financial flexibility” to mitigate the effects of the ongoing COVID-19 pandemic. PNG stressed that “there are currently no plans to deploy the drawn-down funds,” but give them time.
Rival Caesars Entertainment’s shares fell nearly 31% to $3.52 on Wednesday, down from around $14.66 one month ago. Like PNG, Caesars announced that it had fully drawn the remaining available capacity under its credit facilities, adding another $1.15b to its already prodigious debt load.
Tuesday saw Caesars announce the “temporary shutdown” of its entire network of properties, a somewhat moot statement given that authorities in pretty much all US states have already ordered casinos to lock their doors. Unlike Las Vegas Sands, which on Tuesday promised that it wasn’t considering any layoffs or furloughs, Caesars said only that it was “committed to helping employees manage the impact” of the shutdown.
Caesars’ merger partner Eldorado Resorts was down 29.6% to $7.10, an astounding 90% decline from its price just one month ago. Eldorado borrowed $465m from its $500m credit facility this week to aid its virus mitigation efforts.
Boyd Gaming saw its shares fall 29.5% to $7.84, down from nearly $31 a month ago. Boyd said Tuesday that it had borrowed another $660m, only $13m less than the total amount available under its credit facility.
Sands fared best among US casino stocks, falling less than 8% on Wednesday to $37.68, down from nearly $70 a month ago. Sands has yet to indicate any additional borrowing, although that could soon change given that Singapore – home to the insanely profitable Marina Bay Sands resort – just announced that it would “strictly” enforce a self-isolation policy for all new arrivals to the city-state.
Wynn Resorts was down nearly 21% on Wednesday to $43.02 from a peak of over $137 on February 19. Like Sands, the company has said it “committed to pay all full-time” employees during the forced closure of its casinos in Las Vegas and Massachusetts.
MGM Resorts saw its share price fall by one-quarter to $7.14, down from $32 one month ago. MGM was forced to call off its plan to repurchase $1.25b of its stock last week due to the tender price now bearing little resemblance to market reality.
Speaking of, while the US casino lobby is pitching Congress on the possibility of a financial bailout, billionaire Mark Cuban has been leading the charge to ensure that any company that accepts federal cash should be prevented from any future stock buybacks. “Not now. Not a year from now. Not 20 years from now. Not ever.”
Red Rock Resorts (Station Casinos parent firm) saw its shares fall nearly 35% on Wednesday to $3.76, down from over $27 a month ago. Red Rock said it will “continue to offer regular pay and health benefits to all of its hourly and salaried full-time team members through April 30, 2010.”
We assume the above message meant to say ‘2020’, but if not, can we all borrow Red Rock’s time machine, because the future looks downright fugly.
