The stock market posted further gains on Wednesday, lifted by hopes that the U.S. economy will recover quickly from the coronavirus pandemic once measures to reopen businesses start to gain steam. Many states are using phased approaches to reopening, with different categories of businesses having different priorities in terms of when they get to start operating again. Gains for the Dow Jones Industrial Average (^DJI +0.24%), S&P 500 (^GSPC +0.26%), and Nasdaq Composite (^IXIC +0.36%) amounted to roughly 1% to 2%.
Today's stock market
|
Index |
Percentage Change |
Point Change |
|---|---|---|
|
Dow |
1.52% |
369 |
|
S&P 500 |
1.67% |
49 |
|
Nasdaq Composite |
2.08% |
191 |
Data source: Yahoo! Finance.
Cruise ship operators like Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings have gotten a lot of attention from investors looking to maximize their potential returns from a favorable end to the coronavirus crisis. Yet some are now turning to the casino industry for good turnaround prospects because unlike cruise ships, casinos are looking to start inviting visitors back through their doors within days, rather than months. That's producing some impressive stock gains, and there could be more to come if the measures prove successful in attracting people back to the gambling tables and slot machines.
Casinos look to reopen soon
Cruise ship operators have generally canceled voyages for the next several months, with August looking like the first potential chance for travelers to go on board. The Centers for Disease Control no-sail order is still in place, and the agency will want to see extensive plans from cruise companies that tell how they'll handle the health risks involved with COVID-19.
Image source: Wynn Resorts.
Casino resorts aren't waiting that long. Here's what several major regional gambling companies are doing with their casinos:
- MGM Resorts International (MGM +0.26%) wants to reopen its Mississippi-based Gold Strike casino property on May 25, with a broader reopening that includes the Beau Rivage in Biloxi, Mississippi, on June 1.
- Penn National (PENN +0.84%) has already reopened its 10 Louisiana-based casino resorts on May 18, and it plans to reopen in Mississippi on May 21. The operator hopes to reopen operations in West Virginia by June 5.
- Eldorado Resorts (ERI +0.00%) reopened three Louisiana casinos on May 18.
As for Las Vegas, the state is looking at a phased-in approach to reopen. Las Vegas Sands (LVS +0.80%) expects to reopen its Venetian resort on June 1, although the Palazzo will have to wait until a later date. Wynn Resorts (WYNN 0.02%) is looking at a similar time frame, with reservations available as early as June 1 for Wynn Las Vegas.
Will reopening actually be enough?
Investors are sending casino stocks up between 4% and 12% today, with the hope that reopening will bring an end to the cash-burning frenzy that resort operators have endured over the past couple of months. Yet shareholders should be careful about being too optimistic.
The experience of Wynn, Sands, and MGM in Macao tells an important story. Resorts there were allowed to reopen as early as mid-February. But with travel restrictions still in place, customer traffic has essentially evaporated. In April, gambling revenue in Macao was down 97% from year-ago levels, the worst year-over-year comparison yet for the Asian gambling capital.
Nevertheless, regional casino companies tend to draw from a more local audience, and so they're not nearly as worried about international borders remaining closed as major global players like Sands and Wynn. For now, investors will just have to wait and see how things go as casinos open their doors -- and watch how many people come in.
