Wynn Resorts: Market Reacts Frigidly to Third Quarter Financial Results, Macau Market Stays Depressed
Shares of gambling establishment operator Wynn Resorts dropped 3.9% in after-hours trading, from $69.03 (60.64 pounds/69.27 euros) to $66.35, as Macau’s “zero-COVID” strategy continues to negatively influence earnings.
Market Responds Coldly to Wynn’s Third Quarter Financial Results, Macau Market Remains Depressed
Income for the three months ending September 30 decreased 10.5% to $889.7 million from $994.6 million.
The corporation reported a net loss of $142.9 million, or $1.27 per share, for the period. This represents a 14% year-over-year decrease from $166.2 million in the third quarter of 2021. However, on a sequential basis, the loss grew 9.8% from $130.1 million.
The company’s core measurement, adjusted EBITDA, increased 12.2% to $1.735 billion from $1.546 billion, indicating the long-term health of its holdings.
Macau Market Slump
The primary reason for Wynn’s net loss was the continued weak performance of its properties in Macau, where Wynn is one of six concessionaires. 2022 has been a challenging year for the global gambling center, with COVID-related restrictions continuing. A summer lockdown led the Special Administrative Region to experience its worst month ever in July, with revenue falling 95% year-over-year to $49.2 million.
Macau is still experiencing the consequences of COVID travel limitations, but we’re seeing positive indicators with growing demand during the recent October holiday, Wynn CEO Craig Billings remarked. “We’re certain that tourism will recover eventually.”
Travel from abroad and mainland China has declined substantially due to stricter visa regulations and COVID concerns. While some provinces relaxed restrictions on e-visas and group visas earlier this month, the closure of MGM Resorts’ MGM Cotai demonstrates the city’s ongoing uncertainty. The new visa laws have a “circuit breaker” that can suspend them if there’s another outbreak.
“We’re impressed with how the Macau government managed the recent outbreak,” said Wynn President Ian Coughlan. “When we had an outbreak in the summer, we closed the casinos for six weeks to recover.
“This time, the government reversed the situation in just two weeks. Occupancy is beginning to increase this weekend. We’re emerging from the recent outbreak, and I anticipate e-visas to gradually rise in the coming weeks and accelerate in the coming months.”
American Strength
In spite of this, Wynn’s persistent robust performance in the United States at least partially counterbalanced some of the difficulties in its Asian ventures.
“Our teams at Wynn Las Vegas and Encore Boston Harbor have established a new third-quarter record for adjusted property earnings before interest, taxes, depreciation, and amortization in our combined North American properties,” Billings clarified.
“Their unwavering dedication to five-star hospitality, combined with our market-leading conveniences, continue to elevate our properties above their competitors, making them the preferred destination for luxurious guests in Las Vegas and Massachusetts.”
The company’s fundamental strength in this market prompted Billings to assert that new investor Tilman Fertitta acquired shares when they were underpriced.
“Well, I believe I can say that it’s been advantageous for him, because he’s done an excellent job, because he appears to have commenced purchasing when the stock was undervalued in the second quarter. In fact, that’s when we repurchased some of our stock in our second-quarter report,” Billings added.
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