04Aug2:43 pmEST

Rough Nights at the Casino

Don't look now, but Las Vegas Sands has almost completely given back the rally off the March 2020 lows in a rapid-fire pace, not unlike a blackjack player seeing his luck turn before fully realizing it. On the zoomed-out LVS daily chart, below, in front of peers MGM and WYNN both reporting earnings tonight (LVS reported two weeks back) price is almost down to the precise March 2020 low of $35.92--Well, it can get there in short order, at least. 

So, what gives? It is simply an overreaction to the delta variant plus China fears, given the presence LVS has in Macau? The smart aleck answer may be a sarcastic, "Yes," meaning yes to everything. 

But there is also the distinct possibility that the casinos are telegraphing a larger point about the consumer and indeed the economy. Perhaps the "re-opening" animal spirits has exhausted itself, with consumers bound to recoil now that they spent various savings and stimulus measures. 

To give up the entire post-March 2020 rally for a major firm like LVS ought not be overlooked when it comes to the consumer. While I know the airline CEOs cannot wait to declare how busy their flights are with eager travelers even as business travel is slow to come back, one must simply account for the idea that the market has concluded that the re-opening pump was more of an isolated event than the start of the roaring twenties. 

At the outset of the pandemic, I suspected that brick and mortar casinos would be facing longer-term headwinds than many acknowledged. While the size and scope of the rally has certainly been surprising to me, I still maintain that brick and mortar casinos, be it here or in Macau, will continue to face a multitude of headwinds in the coming years.

Thus, after this latest multi-quarter rally, I expect a ton of sideways-to-down action in the LVS MGM WYNN trio for the foreseeable future.  

Going Stag Renegade Biotechs

 
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