Gaming stocks bouncing back to pre-pandemic levels, beyond

People are betting on Las Vegas’ recovery — just look at local casino companies’ share prices as proof.

After taking a nosedive in early 2020, casino operators’ share prices are close — if not already beyond — pre-pandemic levels. Industry experts say this is a sign that investors believe the vaccine rollout and improving COVID-19 case numbers will lead to more foot traffic in the city in the coming months.

“I would just put it all under one word: hope,” Craig Johnson, chief market technician for Minneapolis-based Piper Sandler, said of the rally. “The market is a forward-looking mechanism looking forward six to nine months ahead of time. And I think (these companies’) stock is a bit of a leading indicator and certainly reflective of more needles going in arms.”

Reflecting hope

The stock market had a strong start in early 2020, but things came crashing down with the onset of the pandemic and casino shutdowns.

Caesars Entertainment Inc. shares plummeted 88 percent between Jan. 2 and March 18, the day after Nevada casinos were ordered to shut down. Red Rock Resorts Inc. fell 85 percent in that time frame, and Wynn Resorts Ltd. shares dropped 70 percent.

Johnson said numbers started to really turn around in mid-November, after Pfizer and BioNTech said their COVID-18 vaccine had shown to be more than 90 percent effective.

The Dow Jones Industrial Average skyrocketed more than 800 points Nov. 9, on the heels of the positive vaccine news. Wynn and MGM Resorts International saw the most significant gains that day among the state’s six largest public casino operators, with Wynn closing up 27.7 percent and MGM closing up 14.9 percent.

Shares continued to climb from there.

By Tuesday, four of the six state’s six largest public casino operators — MGM, Caesars, Red Rock and Boyd Gaming Corp. — have surpassed share prices not seen since January 2020. Wynn and Las Vegas Sands Corp. are 12 and 13 percent below their January peaks, respectively.

“As soon as things really start to open up again, I think I think Vegas is going to be a clear destination where people are going to want to go first,” Johnson said. “(The) pick up in stock price is really just reflective of the hope of things reopening and people going on vacation, having an experience in Las Vegas.”

Growing demand

The casino companies’ shares follow a trend seen among the greater travel and tourism industries.

Norwegian Cruise Line, United Airlines, Boeing and Royal Caribbean Cruises were among the top movers in the S&P 500 index on Tuesday.

Johnson said there is “clearly” an emphasis on the entertainment space among investors. He pointed to Boyd Gaming as an example, which closed at $60.42 on Tuesday — an all-time high.

“This has been an absolute beautiful upward-trending trajectory coming off those lows,” Johnson said. “It’s a sign that there is a demand — they’re going to be putting more money into casinos.”

Clyde Barrow, a gaming industry expert and professor at the University of Texas Rio Grande Valley, said the price movements are a sign that people are expecting a 70 percent vaccination rate in the U.S. by the end of the summer, which would be a major boon to Las Vegas casinos and resorts.

It’s impossible to say if this upward trajectory will continue — the stock market is known for its volatility — but Barrow said all signs point toward continued growth.

“Over the long term, (the stock market) goes up. I’d expect that to continue most assuredly, because we’re at really the trough of the business cycle,” he said. “As the vaccine gets rolled out, I think everyone anticipates we’re going to start to see an economic recovery. … We’ll just start to see a general upturn in the economic cycle over the next months.”

The Review-Journal is owned by the family of Sheldon Adelson, the late CEO and chairman of Las Vegas Sands Corp.

Contact Bailey Schulz at bschulz@reviewjournal.com. Follow @bailey_schulz on Twitter.