It’s unlikely there is anything more “consumer discretionary” than taking money into a casino and casually dropping it on the lowest probability devices and games under the sun. It’s a fabulous, usually profitable business for the owners of such properties and the competition for dumb customers is stiff.
Nevertheless, even with Friday’s report that billionaire investor Carl Icahn has taken a stake in Caesars, the basic overall trend of casino/resort stocks is downward. You don’t have to be an Oxford economist to see a probable connection between fewer gambling hall visits and more interest in spending that money where it’s needed.
Hopefully, this is not some kind of overlooked recession indicator. Here are the charts:
Boyd Gaming.
Sam and Bill Boyd started it out in 1975 with Sam’s Town in downtown Las Vegas and expanded from there, now with 28 spots in 10 states. The stock in late April gapped down to the October 2023 low and in May dropped even lower. Note how the price trades below both down trending 50-day and 200-day moving averages.
Caesars Entertainment.
The stock took off Friday on a report that Carl Icahn bought a nice chunk of the company. The heavy volume could not quite take Caesars back to the down trending 50-day moving average. The 200-day moving average continues to down trend. The stock remains lower than the late October 2023 low.
International Gaming Tech.
The United Kingdom-based maker of gaming devices is generally considered a decent measure of casino business activity and the stock’s price direction is not encouraging. The 50-day moving average crossed below the 200-day moving average in late November 2023. Friday’s Icahn-related bounce failed to take it back above the 50-day.
Las Vegas Sands.
Miriam Adelson owns most of the stock (more than half) after the 2021 death of her husband, former CEO Sheldon Adelson. The 200-day moving average is trending relentlessly downward and as of mid-May, the 50-day has crossed back below it. The stock seems to be testing the October 2023 lows and, so far, is succeeding in staying just above them.
MGM Resorts International.
This is probably the best-looking of the major casino names listed here: it’s well above the October/November 2023 lows. That said, MGM remains below both the 50-day and the 200-day moving average.
We’ll see on Monday morning how investors read the Icahn/Caesars report after digesting it over the weekend.
Additional price chart analysis and commentary at johnnavin.substack.com.
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