Gaming Stocks Are Often Losing Bets in June

Posted on: May 30, 2022, 01:03h. 

Last updated on: May 30, 2022, 01:54h.

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

If history holds true to form, the last thing already struggling gaming stocks want is the arrival of June. But that’s inevitable.

gaming stocks
The Las Vegas Strip. June often brings gloom for gaming stocks. (Image: LA Times)

Wednesday marks the start of the sixth month of the year, and with it arrives an often ominous stretch for shares of casino operators. Of the 25 worst-performing S&P 500 members in the month of June over the past decade, eight, or nearly a third, are travel and leisure names. Of those eight, half are casino stocks.

That quartet is comprised of, 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 in the S&P 500 in the sixth month of the year, according to Schaeffer’s Investment Research.

Wynn Resorts has been one of the worst stocks to own in June on the S&P 500 Index (SPX), looking back over the past 10 years. The shares have averaged a June loss of 2.9%, and finished the month higher just three times over the last decade,” according to the research firm.

Should Wynn’s dubious June trend hold up this year, it would add to what’s already a year-to-date loss of 23.26%. But the gaming stock did jump 3.47% last week.

Caesars no June Gaming Stock Star, Either

As noted above, Caesars is no June peach, either. Shares of the Harrah’s operators 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 thus far, down 45.5% year-to-date. The shares are also now sitting well below their 80-day moving average, which has been pressuring the security lower since November. Though CZR is now bouncing off an annual low of $42.59, it’s struggling to break past the $52 level,” notes Schaeffer’s.

To the point about the $52 area, things could be getting interesting for Caesars, because the stock closed at $51.60 last Friday on the back of a 3% weekly gain. Analysts remain bullish on the Horseshoe operator, with 10 rating it a “buy” or better.

The rub there is that if the sell-side reveals newly lowered ratings on the stock, it’d likely come under more pressure. Conversely, options data suggest traders are positive on the name.

“This is per CZR’s 50-day call/put volume ratio of 3.08 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all annual readings. In other words, there has been a healthier-than-usual appetite for long calls of late,” 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 Macau travel restrictions and speculation that operators there are struggling with debt.

The gaming stock averages a June decline of 2.09% over the past 10 years, good for the fourth-worst showing among S&P 500 members. It’s possible that things could be different this year for Sands and Wynn if China decides to scrap its zero COVID-19 policy and allow for freer travel into Macau.

MGM averages a June loss of 0.36% — not nearly as bad as its aforementioned gaming stock brethren — but enough to be among the 25 worst S&P 500 performances in the sixth month of the year.