Friday, 20 July 2018
BREAKING NEWS

Why Melco Resorts & Entertainment Ltd’s Shares Dropped 10.6% Today

Why Melco Resorts & Entertainment Ltd’s Shares Dropped 10.6% Today
03 Jul
1:09

What happened 

Shares of Macau-based gaming company Melco Resorts & Entertainment Ltd (NASDAQ:MLCO) dropped 10.6% in trading Monday after the Macau government released June’s gaming numbers, which weren’t to investors’ liking.

So what

Macau’s gaming revenue rose 12.5% in June versus a year ago to $2.78 billion, bringing the first half of the year to $18.7 billion in gaming revenue, up 18.9% versus a year ago. While the growth looks strong on the surface, June’s growth didn’t meet the 18% growth analysts were looking for and that’s ultimately what set shares lower today. 

Macau's skyline from the water.

Image source: Getty Images.

Taking a step back, this was the worst month for gaming revenue since September 2017, so there was a significant slowdown versus early in the year. That’s something that can send Wall Street into a frenzy because investors don’t know when gaming revenue will hit a peak and start a more troubling decline. 

Now what

It’s worth noting the long-term trends of gaming revenue in Macau, but I wouldn’t lose too much sleep over a single month. The region has seen gaming revenue grow all year and this is the first month there’s been anything amounting to a dip in revenue. We could easily see July return to greater than expected growth and end up with an outstanding year. As a result of today’s move, Melco Resorts’ stock is at a great discount for investors looking for a nearly pure play on the biggest gaming market in the world, Macau. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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