Shares of Caesars Holdings (NASDAQ:CZR) fell as much as 12.6% on Monday as investors continue to unload the new gambling giant. At 2 p.m. EDT shares were still down 12.1% on the day. Since the Eldorado/Caesars merger was completed last week, shares have lost about a quarter of their value.
The biggest news of the day is that hospitality workers have filed a lawsuit against casino operators in Las Vegas, claiming they weren't adequately protected from COVID-19. Workers claim that casinos didn't shut down food and beverage facilities or immediately inform workers of outbreaks.
Casino stocks are down across the board today, so that could be hurting the stock as well. Caesars is one of the most highly leveraged stocks in the industry, so it makes sense its move would be exaggerated versus industry peers.
While I wouldn't pay too much attention to one day's move in Caesars' stock, I don't think this is a good time to buy shares either. I recently wrote that Caesars is taking on far more debt that investors should be comfortable with and may already be setting itself up to fail. The last time a buyout or merger of this scale took place, it was Caesars' who was bought out and that ended in a bankruptcy filing for part of the company. That's not a good legacy and a drop in shares doesn't make this a value stock today.