Please ensure Javascript is enabled for purposes of website accessibility

Why Melco Resorts & Entertainment's Shares Fell 16% Today

By Travis Hoium – Nov 8, 2018 at 12:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Macau has been a tough gaming market for Melco Resorts in 2018.

What happened 

Shares of casino operator Melco Resorts & Entertainment (MLCO 1.73%) fell as much as 15.6% in trading Thursday after the company reported third-quarter financial results. At 1:40 p.m., EST shares were still down 10.8% on the day. 

So what

Quarterly revenue fell 11% to $1.22 billion, and adjusted EBITDA, which is a measure of cash flow from a resort, was down 26% to $295.4 million. Net income declined from $115.9 million a year ago to just $9.6 million, or $0.02 per share. Analysts were expecting $0.22 per share in earnings on $1.34 billion of revenue. 

Macau's skyline viewed from the water.

Image source: Getty Images.

Melco Resorts is already seeing it, but Wynn Resorts' CEO said there's a slowdown taking place in Macau's high-end gaming market, which is also spooking investors today. 

Now what

On top of the overall market slowdown, Melco Resorts is dealing with increased competition in Macau from new resorts like Wynn Palace and MGM Cotai. They're pulling market share away from Melco and causing the decline in earnings you see above. And if Macau starts shrinking gaming revenue on top of market share losses, it could be a rough end to 2018 for Melco Resorts. 

Travis Hoium owns shares of Wynn Resorts. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Melco Crown Entertainment Limited Stock Quote
Melco Crown Entertainment Limited
$5.30 (1.73%) $0.09
Wynn Resorts, Limited Stock Quote
Wynn Resorts, Limited
$59.65 (-0.90%) $0.54
MGM Resorts International Stock Quote
MGM Resorts International
$30.05 (-1.83%) $0.56

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.