Share Fluctuations Cause For Concern In US
Fluctuations in the value of shares as well as overall performance are normal occurrences in any industry, especially volatile industries such as those dependant on income from non-essential services such as entertainment and gaming. Shares in a number of major US gaming companies were down considerably a couple of days ago after performance concerns were voiced regarding the Las Vegas Strip, as well as Chinese autonomous region and gambling super-district, Macau.
It’s been a dramatic couple of months for the gaming industry in general in the United States, with everything from legislation amendments to uncertainty regarding on going trade agreements with China, threatening to rock the boat. Now, in what feels like a situation of adding insult to industry, major role-players Caesar’s Entertainment, MGM Resorts and Scientific Games have released their figures for Q2, and all three have experienced a significant drop in share prices following the release of the financial reports.
What’s more, the word on the street is that other US operators have experienced the same drop in value, despite the fact that they have not yet released any news about the matter.
Softening Expected for Q3
Comments made by Caesers Chief Financial Officer, Eric Hession, during an investor’s call concerning the current demand in Las Vegas, caused grave concern among analysts. Hession spoke openly with investors, saying that despite the fact that the group outperformed all expectations during Q2, a softening was experienced as far as demand was concerned for the months of July and August.
Caesars Chief Executive, Mark Frissora, had previously referred to the figures reported for Q2 as being solid results that were driven by a strong demand for gaming and hospitality services in Las Vegas in particular.
Now, Hession was saying that the group was feeling cautious as to the provision of guidance regarding the probably outcomes for the third quarter of the year, as Caesars was expecting less than optimal outcomes for the remainder of Q3.
The announcement by Hession caused investors to act quickly by withdrawing their money out of Caesars, which was the cause for the sudden drop in share prices.
An Ever-Evolving Landscape
A similar situation prevails in the ranks of MGM and Scientific Games. MGM became the official betting partner of NBA during last week and has been focusing on sports betting and the newly legislated Integrated Resorts in Japan as a means of fresh revenue income.
Despite positive expectations regarding sports betting and new markets, MGM too, reported less than satisfactory results for the second quarter of the year.
Analysts conclude that part of the problem is the needs of international clients could evolve to the point of conflict. Ironically, this is because of the rapid growth and evolution in the gaming industry.