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Why Did Las Vegas Sands Stock Fall Rapidly in September?



September brings negative news

If we look at July, August, and September, Las Vegas Sands (LVS) stock remained relatively flat or slightly lower for the first two months. But the steepest fall came in September, dragging the stock down about 18% in a short time span.

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What went wrong?

Las Vegas Sands is a key player in the Macao gaming region, and the news of the declining numbers in Macao adversely affected the stock. Macao gaming revenues fell for the 16th consecutive month in September, when the stock fell 33%. This drop was followed by a 4.7% fall in Las Vegas gaming revenues for the same month.

Other news that dragged down the stock was Fitch’s downward revision of the Macao gaming scenario. Fitch reported that gaming revenues in Macao were down 36.5% through August. In its latest report, Fitch now expects revenues for the region to fall 33% to 34% instead of its previous mark of 29%. The downgrade comes at a time when the industry has already been suffering revenue declines since last year.

Junket theft

The month of September also saw a scandal over a VIP gambling junket at rival Wynn Resorts (WYNN), which resulted in the disappearance of $258 million from junket Dore Holdings. This incident has further shaken confidence in Macao, which was already suffering due to the anti-corruption campaign and falling gaming revenues.

Investors who want to avoid the risk of investing in a single casino company such as Las Vegas Sands (LVS), Melco Crown Entertainment (MPEL), MGM Resorts (MGM), and Wynn Resorts (WYNN), which were hit by the corruption crackdown by the Chinese government, could invest in ETFs that invest in casino stocks. One such ETF is the VanEck Vectors Gaming ETF (BJK). For a broader exposure, you can invest in the iShares US Consumer Services ETF (IYC).


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