Casino Stocks Amid the Coronavirus Pandemic

The coronavirus pandemic has hit the gambling industry quite hard and since the beginning of 2020, casinos all over the world have been affected. Many of these have been forced to close, losing revenue and result in plummeting stock prices. Right after the first COVID-19 case was announced in Las Vegas, stocks started to quickly drop. Red Rocks Resort (RRR) shares fell by 11.3% and MGM saw a huge drop of 8.7%. Some other stocks that saw a decline on the first day of hearing of a COVID-19 case were Boyd Gaming (BYD), Wynn Resorts (WYNN), and Las Vegas Sands (LVS).

Over the next month, stocks continue to fall as casinos were forced to shudder, and just about all tourism in Vegas came to a halt. The casino industry has faced many struggles throughout the pandemic and stock prices are just one of the negative effects COVID has caused. In addition, thousands of people are out of work as casinos had to lay off employees due to shutdowns. The question is, will casinos recover, and will stock prices rise?

The Start of a Rally

Just one month after the first case in Las Vegas, stocks started to rally. This was largely due to investors betting on Vegas reopening, and with reopening will come higher stock prices. Investors were not wrong! In June, Las Vegas casinos started to open their doors and enjoyed a huge spike in stock prices as a result. This was not only happening in Vegas, but across the US in states that offer casino venues, and especially those that feature online gambling.

Three major casinos in Vegas saw increases in stock activity and prices after opening. As of June 5, MGM stock has a market capitalization of $10.71 billion and was trading 50% higher than the previous month. Wynn Resorts enjoyed an 18.56% stock increase in one month and Las Vegas Sands Corp was trading at $52.35, adding 15% from May to June.

The Recovery Continues

The pandemic has played a huge role in the casino industry and in addition to the shutdowns that happened at the beginning of the year, casinos have been faced with lower revenues and higher operating costs since they have reopened. While patrons have been playing in the casino floors, casinos are still struggling to get players back inside and to rally from falling stock prices.

Luckily, many of the major casinos in Vegas have been able to stay afloat due to younger players visiting the casinos and spending more time on the gaming floor. However, there is still a drastic fall in revenue from the previous year and casinos are faced with the added costs of offering preventative measures.  It is still not clear what the casino industry will look like in the coming months, but they are starting to rebound. With casinos now open for business, stocks have continued to increase, which is a good sign.

However, there are some major obstacles ahead. As we enter the flu season, there is a possibility of a major outbreak of the virus, which may lead to another shutdown. If this happens, the stock prices will plummet again. The only thing investors can do is wait things out and watch trends to see if there are any surges in prices in the coming months.

Solid Stock Picks

Even though the overall gambling industry has suffered through the pandemic, there are some companies that have done quite well. Those that focus on offering online betting are the companies that have survived the pandemic and continue to thrive in an unstable economy. If you are looking to invest, you may think that buying into the casino industry would be a huge mistake at this time, but you would be wrong.

There are three great stocks that have been performing quite well even during the pandemic and these are expected to continue to generate profits for investors. If you want to get in on some casino stocks, consider these below. We offer the latest stats and information to help you make a decision on whether now is the time to purchase stocks in the casino industry.

– Penn National Gaming (PENN) – This is an American operator of online casinos and many racetracks. Since 1982, the stock has had a Zacks Rank of 2 and has offered a massive return of 499.1% over the past six months. The success of Penn National comes largely from their online presence. The company recently launches the Barstool Sportsbook app in Pennsylvania and enjoys consistent revenue from iCasino.

– Churchill Downs Incorporated – Churchill Downs (CHDN) is an online wagering entertainment company that operates in Kentucky. With a Zacks Rank #1, the stock gas offered a 69.7% return over the past six months in comparison with a 39.6% industry growth. This company has many plans to launch online betting platforms in many US states by the end of the year.

Red Rock Resorts, Inc – This gaming company primarily operates in las Vegas and carries a Zacks Rank #2. The earnings estimate for 2021 is 103.9% and in the past six months, the stock has returned 84%.