Gaming stocks tend to sag in June

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Published on: May 30, 2022, 01:03h.

Last update: May 30, 2022, 01:03 a.m.

If the story stays true to form, the last thing already struggling gaming stocks want is the arrival of June, but that’s inevitable.

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The Las Vegas Strip. June often brings gloom for gaming stocks. (Image: Los Angeles Time)

Wednesday marks the start of the sixth month of the year and comes an often worrisome time for casino operator stocks. Of the 25 worst-performing S&P 500 members in June over the past decade, eight, or nearly a third, are travel and leisure names. Of those eight, half are casino stocks.

This quartet includes, in alphabetical order, Caesars Entertainment (NASDAQ:CZR), Las Vegas Sands (NYSE:LVS), MGM Resorts International (NYSE:MGM) and Wynn Resorts (NASDAQ:WYNN). With average June losses of 2.91% and 2.30%, respectively, over the past decade, Wynn and Caesars are the second and third worst offenders on the S&P 500 in the sixth month of the year, according to Schaeffer’s Investment. Research.

Wynn Resorts was one of the worst stocks to hold in June on the S&P 500 (SPX) index in the past 10 years. Stocks posted an average loss of 2.9% in June and ended the month up only three times in the past decade,” according to the research firm.

If Wynn’s questionable June trend continues this year, it would add to what is already a 23.26% year-to-date loss, but gaming stock jumped 3.47% last week. .

Caesars no June Gaming Stock Star, Either

As noted above, Caesars is no June peach either. Shares of Harrah’s operators have posted losses in the final month of the second quarter in seven of the past 10 years.

“The casino stock has had a dismal 2022 so far, down 45.5% year-to-date. The shares are also well below their 80-day moving average, making pressure on the stock since Nov. Although CZR is now bouncing off a yearly low of $42.59, it is struggling to break above the $52 level,” Schaeffer’s notes.

As for the $52 zone, things could get interesting for Caesars as the stock closed at $51.60 last Friday on a weekly gain of 3%. Analysts remain bullish on the Horseshoe trader with 10 rating it a “buy” or better.

The catch is that if the sell side reveals recently downgraded ratings on the stock, it will likely come under more pressure. Conversely, options data suggests traders are positive on the name.

“This is CZR’s 50-day call-to-sell volume ratio of 3.08 on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX), which is higher than all yearly readings. In other words, there has been a healthier than usual appetite for long calls lately,” adds Schaeffer’s.

LVS Nothing to brag about in June, either

Shares of Las Vegas Sands are down 8% year-to-date – a loss that’s mostly attributable to travel restrictions from Macau and speculation that operators there are saddled with debt.

The gaming stock averaged a 2.09% decline in June over the past 10 years, good for the fourth-worst performance among members of the S&P 500. Things may be different this year for Sands and Wynn if China decides to abandon its zero COVID-19 policy and allow freer travel to Macau.

MGM averaged a 0.36% loss in June — not as bad as its aforementioned playmates — but enough to rank among the 25 worst performers on the S&P 500 in the sixth month of the year.

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