Investors skittish as economy threatens casinos

April 29, 2008 7:00 PM
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Industry Insider by Ray Poirier | With little good news forthcoming, except from Macau, Wall Street remained skittish relative to major gaming stocks on the eve of the earnings season when the companies will report their quarterly experience.

Las Vegas Sands Corp. (LVS) and Wynn Resorts Ltd. (WYNN), two major players in Macau, got a boost early last week when Macau officials announced they would not be issuing any more gaming licenses until they have had a chance to review the current situation.

Since Macau has been the world’s developing giant among gaming jurisdictions, the news pushed LVS shares from the middle $60’s to Monday’s closing of $71.86 per share. The same boost went to WYNN shares which moved to $107.90 from last week’s $96 per share level.

But, for MGM MIRAGE Inc. (MGM), also competing in Macau, there was barely a positive reaction as analysts looked instead for insiders such as Kirk Kerkorian, the company’s largest single shareholder, and Dubai World, an MGM partner in the developing CityCenter project, to boost the share price.

Dubai World had indicated it was willing to buy shares at $80 each so, said analysts, "why wouldn’t they be buying at $48 or $49?

And Kerkorian, who in the past has boosted the share price with internal offers, instead went public with an announcement from his privately-owned Tracinda Corp., that he would pay $8.50 a share for 20 million Ford Motor shares.

More than anything, however, the crumbling economy has kept many investors on the sidelines.

Even on Monday, a pair of analysts following Boyd Gaming Corp. (BYD), warned their clients to be cautious because the company is likely to be hurt by a softness in the Las Vegas locals market.

Boyd Gaming reports its first fiscal quarter numbers on Tuesday, April 29.