- A sea of red marked the beginning of the week for casino operators, with only Boyd Gaming (NYSE: BYD) as the exception.
- Operators that heavily rely on Las Vegas, including MGM, Las Vegas Sands, and Caesars Entertainment saw declines in their stocks.
- Investors currently fear a potential spike of coronavirus cases in the country, with no normalcy timeline in sight.
- The lingering debate on when a vaccine can become widely available is also putting pressure on gaming equities that heavily rely on the Strip.
Gaming equities followed broader markets Monday as investors fear about another potential spike of coronavirus cases in the country. Wall Street is becoming more reflective concerning the timeline for the return to normalcy, specifically when it comes to travel and leisure stocks.
Casino operators will begin the week with stocks that have lost value except for Boyd Gaming (NYSE: BYD). The regional gaming company’s shares were higher by 1% in midday trading Monday, a move that probably got a boost from the bullishness on sports betting.
The Orleans operator is an exception rather than the rule since most gaming equities are being hit. Anxiety has hit market participants over the increased number of pandemic-related restrictions across Europe.
In a note on Monday, Deutsche Bank analysts said people should expect more restrictions in the coming days and weeks, “especially in Europe.” They added that the rapid spread of the virus is something to worry about.
France reported 10,569 new COVID-19 cases Sunday, while the UK announced close to 4,000. Worse still, the US fatality count from the disease approached 200,000 over the weekend.
Previous hot spots Arizona and Florida reported case count rises of 0.1% and 0.2% from Sunday to Monday. However, these percentages were well below the 0.4% seven-day average on Monday.
Nevertheless, that progress won’t allay concerns about gaming stocks since Las Vegas NYSE: LVS) was lower by almost 6%, while MGM Resorts International (NYSE: MGM), the Las Vegas Strip’s largest operator, dropped by at least 4% at the beginning of the week.
The Murky Timeline of Vaccine Release
Gaming equities, particularly those that rely heavily on the Strip, are further getting pressure from the lingering debate on when a vaccine will be available for widespread distribution.
While President Donald Trump believes vaccinations can start as soon as October, the Centers for Disease Control and Prevention (CDC) says the more likely months are November or December.
However, CDC says it will take between six and nine months for all Americans to receive the dose. This means things won’t return to normal until the third quarter of 2021.
Investors are unlikely to continue holding gaming equities until this timeline since corporations are postponing conventions, while several leisure travelers are cautious about traveling.
To emphasize the sensitivity of Las Vegas-reliant operators to the issue of the vaccine, Caesars Entertainment (NASDAQ: CZR) joined rival MGM to the downside Monday with a loss of close to 4%.
An alternative for financial markets and casino operators could be a COVID-19 treatment. However, the many therapies at different stages of trials do not offer as much hope as the vaccine.