Shares of gaming giant Wynn Resorts, Limited (NASDAQ: WYNN) dropped 14.6% in June, according to data provided by S&P Global Market Intelligence, as gaming trends in Macau turned against the company.
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In early June, results from Macau's gaming revenue in May were released and they weren't as strong as expected. Gaming revenue was up 12.1% versus a year ago to $3.16 billion, but that fell well short of the 16% to 20% growth that analysts were expecting. Conditions didn't get much better in June when revenue was up 12.5% to $2.78 billion, which was also below the 18% growth expectations. It should be no shock that shares fell 6.3% in the first four trading days of July as well.
Wynn Resorts gets nearly three-quarters of its revenue from Macau, so a slowdown in the region would be a big deal for the year's results. That said, the region is still growing, so it's not all bad news.
Two months doesn't make a trend, so investors will want to watch what the longer-term trends are in Macau. If gaming revenue growth indeed slows or worse yet falls, it would be bad for Wynn's profitability long term. But I also don't think investors need to overreact to a quarter or two. China's economy is still strong and Macau is well positioned to benefit from the need for entertainment in the region. Long term, this is still a great business to be in even if the monthly ups and downs of gaming can cause the stock to be volatile.
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