Please ensure Javascript is enabled for purposes of website accessibility

Why Las Vegas Sands' Shares Have Dropped 34% in the First Half of 2020

By Travis Hoium – Updated Jul 9, 2020 at 1:56PM

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

It has already been a year to forget.

What happened 

Shares of casino giant Las Vegas Sands (LVS 2.07%) dropped 34% in the first half of 2020, according to data provided by S&P Global Market Intelligence, as the gambling industry was turned on its head. And there may be even more uncertainty in the second half of the year. 

So what 

COVID-19 has hit the resort and casino business hard, the biggest reason shares are down. As a company focused in Asia, the 77.4% drop in gambling revenue in Macao is the one indicator of just how bad conditions have gotten for Las Vegas Sands' main market. 

Macao's skyline from the water at dusk.

The Macao skyline. Image source: Getty Images.

The problem is that we don't know when customers will return to casinos. In Asia, travel restrictions aimed at controlling COVID-19 have made it difficult or impossible to get to Macao. In the U.S., resorts were closed for months, and their recent reopening may be met with skepticism by gamblers and those who once traveled to Las Vegas for work or leisure. 

Now what 

While the casino industry is going through a challenging time, no company is built to survive the way Las Vegas Sands is. The company has $2.6 billion of unrestricted cash on the balance sheet with another $3.9 billion in potential borrowing ability. And when casinos do open, it has some of the industry's highest margins and best cash flow. If you can ride out the storm, this is a gambling stock worth owning for the long term.

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

Premium Investing Services

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