What happened
Shares of Las Vegas Sands (LVS 0.92%) were up 12.4% as of 1:05 p.m. ET on Monday. The jump followed positive news over the weekend about the return of tourism in China's Macau Special Administrative Region, where Las Vegas Sands has invested over $15 billion for future growth.
Other casino stocks were also rising on the news, with Wynn Resorts up 12.8% at the time of writing.
NYSE: LVS
Key Data Points
So what
The announcement is anticipated to revive the Macau economy after nearly three years of travel restrictions due to the pandemic. It's an increasingly important part of Las Vegas Sands' future. The casino operator sold its Las Vegas operations for about $6.25 billion in the first quarter this year to focus on growth in Macau and Singapore.
Las Vegas Sands saw its revenue plummet during 2020 but has only partly recovered over the past two years. The news about Macau means money for a business that is bleeding cash to the tune of $1.4 billion in negative free cash flow over the past four quarters. In 2018, Las Vegas Sands was generating over $4 billion in free cash flow.
Now what
During the second-quarter earnings call, CEO Robert Goldstein expressed optimism about returning to pre-pandemic performance levels. With the return of tourism at Macau, which now is expected to happen in November, the market is now counting on improved revenue and profit growth for the company.
Goldstein called Macau "an outstanding market for additional investment." Management sees tourists staying longer after traveling greater distances to get to Macau, which adds to the economic value to businesses in the area.
Las Vegas Sands has placed the largest investment among its casino competitors in Macau, offering nearly a third of the total hotel capacity by gaming operators in the region. Because of this exposure, Las Vegas Sands is more of a pure play on Macao compared with other top casino stocks.
