Caesars’ slowdown call spooks investors
CAESARS Entertainment’s stock fell sharply after the casino titan, once touted as a contender to operate a second Gold Coast casino, said it expected weak results in the current quarter because of fewer scheduled events and lower room rates in Las Vegas.
Caesars reported secondquarter net income of $US29 million ($A39.1 million), after reporting a loss in the same period a year earlier.
On a per-share basis, the Las Vegas-based company said it had profit of 4¢. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 1¢ per share.
While the results topped Wall Street expectations, executives rattled investors by saying on a conference call they were seeing lower demand in Las Vegas for July and August.
That triggered a selling spree that forced Caesars’ stock to be halted three times during the call, even as executives attempted to reassure industry analysts the slowdown was only temporary.
Shares in Caesars Entertainment Corp at one point on Wednesday fell more than 24 per cent in trading.
They ended the day down almost 15 per cent at $9.63.
Other casino operators also saw their stocks tumble.
Caesars expected thirdquarter revenue per available room in Las Vegas to grow up to 2 per cent and kept its fullyear guidance at 4-6 per cent.
Caesars president and CEO Mark Frissora told analysts Las Vegas would host fewer entertainment shows during the third quarter compared with the same period last year, which featured the mega-fight between Floyd Mayweather Jr and Conor McGregor and other events that drew thousands of people.
“There was a very large difference in programming, which is what’s driving this softness,” Mr Frissora said. “This is a two-month blip.” He also explained Caesars was facing room-rate pressure.
The agency responsible for promoting the destination on Tuesday reported that revenue per available room on the Strip in June came in at $US115.36, a 4.3 per cent decrease on the same month last year.