Yahoo Finance Why Wynn Resorts Shares Plunged 15.3% in August
What happened
Shares of casino giant Wynn Resorts (NASDAQ: WYNN) fell 15.3% in August, according to data provided by S&P Global Market Intelligence, as trade tensions with China heated up. They have recovered slightly in September but are still down about 10% since the start of August.
So what
Over 70% of Wynn's revenue currently comes from Macao, a semiautonomous part of China that relies heavily on Chinese visitors. As the trade war with China heats up, there are multiple ways the fallout could hit Wynn Resorts and others in Macao. Most notably, China may retaliate against U.S. companies, or a slower economy could hurt Macao's gambling revenue.
The Macao skyline. Image source: Getty Images.
Those fears were enough to send Wynn's stock lower. It didn't help that Macao's gambling revenue fell 3.5% in July to 3.04 billion, which was reported in early August. And early this month, we found out revenue was down 8.6% from a year ago in August, so a slowdown in Macao appears to be gradually taking place.
Now what
As big as the market's reaction was to Wynn Resorts last month, there wasn't a lot to fundamentally change your investment thesis for the stock. Macao continues to be an extremely lucrative place to operate a casino, even though the region may shrink slightly this year. Plus, Wynn recently opened the Encore Boston Harbor, which will boost the company's growth and likely help the bottom line long term. There's no reason to jump ship on last month's news if you like the company's path long term.
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Travis Hoium owns shares of Wynn Resorts. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
This article was originally published on Fool.com
