The past few years have been good for casino stocks, and that’s due in large part to their incredibly rapid expansion in Macau, an expansion made possible by the expansion of the Chinese middle class and the government’s easing of travel restrictions. All the big casino/resort stocks have capitalized on Macau’s growth, and while everyone agrees that it can’t continue at this pace forever, the market was taken very much off guard on Monday when numbers out of Macau came in well below expectation. Gaming revenue in Macau rose 12.5% year-over-year, while analysts had been predicting a gain between 17% and 21%. This raises an old question with some urgency: did the big gaming companies use the money from Macau to get their houses in order, or did they let themselves get sloppy as they feasted on easy profits? That can only be answered on a company by company basis, and that’s what I’ll be doing today.
Remember to treat these ideas as just that, ideas, and do your own research before making any investment decision.