Shares of Macau gaming company Melco Resorts & Entertainment Ltd (NASDAQ:MLCO) fell 14.3% in June, according to data provided by S&P Global Market Intelligence, due to worse-than-expected operating conditions.
May gaming revenue in Macau, which is released early in June, was up 12.1% from a year ago to $3.16 billion -- well below the 16% to 20% growth that analysts were expecting. The trend continued in June, with revenue increasing 12.5% over a year ago to $2.78 billion, but falling well short of the 18% growth analysts were expecting.
The fear is that Macau's gaming market is slowing and may stagnate in the second half of the year. After nearly two years of consistent growth, investors would have to adjust to not seeing double-digit increases in gaming month after month.
Macau releases gaming revenue each month, which can cause some wild swings in gaming stocks. Investors can see on a very granular level when revenue is coming in rather than watching the long-term trends. That focus on the short term is why Melco Resorts has tumbled since the beginning of June, and it could take a few months to see if the disappointing trends will lead to stalled growth or if it's an aberration for the region.