So Vegas is having what we might politely call a “challenging summer.” Translation: fewer people are showing up, and the casino stocks are starting to sweat harder than a tourist in 115-degree heat.
Here’s the deal: Las Vegas tourism dropped 11.3% in June compared to last year, according to the Las Vegas Convention & Visitors Authority. Hotel occupancy fell 6.5%, and suddenly those fancy Strip hotels are offering discounts like they’re a Black Friday electronics sale. When Vegas starts cutting prices, you know something’s up.
The Big Players Are Feeling It
Let’s talk about the heavy hitters. Caesars Entertainment (NASDAQ: CZR) saw its Vegas revenue drop 3.7% in Q2. Not catastrophic, but not exactly the kind of number that makes shareholders do a happy dance. The stock is down about 20% this year, which is… ouch.
MGM Resorts (NYSE: MGM) had a similar 4% decline in Q2. At least they’re consistent? MGM is actually up 5% for the year, so they’re not completely in the doghouse yet.
Both companies are basically saying “trust us, the second half of the year will be better” because of upcoming conventions and concerts. Classic corporate optimism – we’ll see if it pays off.
The Locals Know Something We Don’t
Here’s where it gets interesting: Boyd Gaming (NYSE: BYD) actually crushed expectations with a 7% revenue increase. Their secret? They focus on locals casinos – places like Gold Coast and Sam’s Town where actual Las Vegas residents go to gamble.
Turns out, while tourists are staying home (probably because Vegas got expensive AF), locals are still showing up to lose their money at the slots. Boyd’s CEO basically said “our local customers are picking up the slack from all those missing tourists.” Smart positioning, and their stock is up 17% this year to prove it.
Wall Street’s Take
Goldman Sachs analysts are still bullish on Caesars and Wynn Resorts (NASDAQ: WYNN). They slapped a “buy” rating on Caesars with a $36 price target (it’s trading around $26 now, so that’s some serious upside if they’re right).
Wynn hasn’t reported Q2 earnings yet, but everyone expects them to hold up better because they’re the luxury option. Rich people apparently still have money to burn, even when everyone else is tightening their belts.
The Bottom Line
Vegas’s slow summer is real, but it’s not necessarily a death sentence for casino stocks. The key is figuring out which companies can weather the storm. Boyd proved that knowing your customer base matters. Wynn might show that luxury brands are recession-resistant. And Caesars… well, they’re betting on a strong second half.
If you’re thinking about casino stocks, maybe don’t put all your chips on the tourist-heavy Strip operators right now. Sometimes the smart money follows the locals.