Casino Stocks Often Swoon in June

Posted on: June 4, 2024, 04:46h. 

Last updated on: June 4, 2024, 04:46h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

After today, there are 18 trading days remaining in June, meaning there’s much left to be determined regarding the broader market’s monthly performance. But if historical precedent holds true, this month could be a trying one for casino stocks.

Wynn Resorts
Wynn and Encore on the Las Vegas Strip. The operator’s stock is one of several casino names that often struggle in June. (Image: Luxury Lifestyle Magazine)

Of the 25 worst-performing members of the S&P 500 over the past 10 Junes, three are casino equities with Wynn Resorts (NASDAQ: WYNN) ranking as the worst offender of the trio in the sixth month of the year.

According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, Wynn Resorts is the third worst stock on the S&P 500 Index (SPX) to own in June, looking back over the past 10 years. The shares averaged a loss of 3.1% for the month over the last decade, and finished the month lower seven times,” noted Schaeffer’s Investment Research.

As measured by median June returns over the past decade, Wynn is the worst performer in the S&P 500 in the sixth month of the year.

Interesting Seasonal Trend Pertaining to Casino Stocks

There’s an interesting element regarding the seasonal trends seen in June. While Memorial Day marks the start of the summer travel season, travel and leisure stocks typically don’t perform well in June.

Joining Wynn as the three worst offenders in the S&P 500 in the sixth month of the year are travel booking site Booking.com (NASDAQ: BKNG) and cruise operator Royal Caribbean Group (NYSE: RCL). Two other pure play travel and leisure names are also among June’s worst-performing stocks over the past 10 years.

That weakness is arguably an indication of market efficiency and confirmation that prosaic investment theses, such as buying a stock due to elevated visitation to casinos in the summer months, aren’t always validated. In fact, those outlooks can be punished.

Another example of that trend is the historical weakness of the energy sector during the summer months. While it’s widely known that gasoline demand and prices increase as the summer travel season takes off, traditional energy equities often lag in the late second quarter and into the third quarter.

Caesars, MGM June Casino Stock Offenders, Too

Confirming that the expectation that Las Vegas Strip and other casino visitation will increase in June doesn’t necessarily pay off in the form equity upside, MGM Resorts International (NYSE: MGM) and Caesars Entertainment (NASDAQ: CZR) are also among the worst-performing S&P 500 stocks in the sixth month of the year.

MGM and Caesars — the two largest operators on the Strip — averaged June losses of 0.95% and 1.72%, respectively, over the past 10 years, according to Schaeffer’s.

Caesars’ median June loss of 3.61% over the past decade is good for second-worst in the S&P 500 behind only Wynn.