Share price of Las Vegas Sands plunges post 4Q14 but bounces back

Macao gaming revenue

Casino revenue in Macao fell 17.4% year-over-year to 24.7 billion patacas in January. However, Macao’s gaming revenues in January 2015 increased by 2.0% from December 2014. Wall Street analysts expect more than a 30% revenue decline in February. They also expect monthly gaming revenue numbers to stabilize on a sequential basis.

Share price of Las Vegas Sands plunges post 4Q14 but bounces back

Recent performance for Las Vegas Sands

Las Vegas Sands’ (LVS) share price plunged immediately after its 4Q14 earnings announcement last week. This could be due to a 6.6% fall in the company’s fourth quarter revenues. However, LVS’s share price gained 3.1% as of February 3. This could be due to its share price, which has bottomed out over the last 12 months, declining more than 30%, as shown in the above chart.

LVS reported significant improvement in its operating performance for its Singapore properties. Adjusted property earnings before interest, taxes, depreciation, and amortization (or EBITDA) increased by ~100% year-over-year in the fourth quarter of 2014.

The above chart shows that LVS’s share price performed poorly over the last 12 months compared to the SPDR S&P 500 ETF (SPY). If we look at the year-to-date performance as of January 30, then both LVS and MGM Resorts (MGM) have underperformed the SPY, while Wynn Resorts (WYNN) and Melco Crown Entertainment (MPEL) have outperformed the SPY.

Several events have negatively affected the share prices of these casino companies, including the ongoing anti-corruption campaign in China, President Xi Jinping’s visit in December, and the smoking ban legislation.

Investing through ETFs

Investors may invest in ETFs such as the VanEck Vectors Gaming ETF (BJK) to avoid the risk of investing in single casino stocks. It should be noted that BJK has ~25% exposure to these casino companies.