Shares of Boyd Gaming (BYD 7.65%) fell 30.2% in the first half of 2020, according to data provided by S&P Global Market Intelligence, as COVID-19 forced the shutdown of all of its resorts. And there may be no end in sight.
In March, Boyd Gaming and the rest of the gambling industry were forced to shut down casinos in order to combat COVID-19. That resulted in a 17.7% drop in revenue in the first quarter to $680.5 million and an $18.3 million net loss. But that was only with a few weeks of impact, so the second and third quarters will likely be much, much worse.
The problem is that we don't know when the shutdown will end. COVID-19 cases in the U.S. are still rising, and states are already starting to close businesses with a high likelihood of spreading the coronavirus. Casinos may be one of the first places on the list to be shut down again.
While results in 2020 will be weak, the story right now is about survival. Boyd raised $600 million at an interest rate of 8.625% through 2025 when the pandemic struck. That may be enough to give it multiple quarters of runway to survive the pandemic. I think there are better bets on the recovery of gambling, like casinos with operations in Macao that make them long-term growth stocks. But if casinos start drawing more customers as 2020 wears on, Boyd Gaming stock could make a comeback for investors willing to hold on for the ride.