Why Caesars Entertainment Corp Was a Losing Bet in 2015

By Markets Fool.com

What: Shares of Caesars Entertainment Corp plunged 49.7% in 2015 according to S&P Capital IQ data as the company veered closer and closer to bankruptcy.

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So what: On Jan. 15, Caesars' biggest operating unit, Caesars Entertainment Operating Company, filed for bankruptcy. Since then, the parent company has been in a state of flux. Caesars is trying to restructure the operating company, forcing bondholders to take less than face value of debt while keeping the parent company out of bankruptcy. There are multiple court cases that will determine if the operating company's bankruptcy will drag the parent company into bankruptcy as well. That uncertainty is what pushed Caesars Entertainment's shares lower in 2015.

Now what: We still don't know if Caesars Entertainment will stay out of bankruptcy, and there are billionaires fighting over this bankruptcy case as I write, so as individual investors it's impossible to know Caesars' fate in 2016. Even if the parent company isn't pulled into bankruptcy, the company's operations are under duress with the company reporting losses in 2015.

Given the uncertainty and the possibility Caesars could be pulled into bankruptcy, I don't see a reason to buy the stock no matter the discount. This year could be even worse than last.

The article Why Caesars Entertainment Corp Was a Losing Bet in 2015 originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool is short Caesars Entertainment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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