Posted: Sep 23, 2021, 10:39 a.m.
Last updated on: September 23, 2021, 10:59 a.m.
Amid the specter of increased regulatory oversight in Macau, Las Vegas Sands (NYSE: LVS) and Wynn Resorts (NASDAQ: WYNN) are two of the worst performing gaming stocks this month. But that does not prevent some investors from adopting the names of the casinos.
Data from Vanda Research indicates that retail investors are buying the LVS and Wynn declines this week. Small investors flocking to the gaming stock pair come about a week after Macau’s six dealers lost a combined market cap of $ 20 billion in a single day amid heightened regulatory fears.
The authorities of the Special Administrative Region (SAR) – the largest casino center in the world – are pushing for a “healthy and sustainable development” of the gaming industry. This effort could take various forms, but market players fear increasingly that the Macau government can demand and obtain more shares in gaming companies, exercise more control over day-to-day operations, and exercise more influence over corporate capital spending, including payments of dividends. .
Since the start of the month, shares of LVS are down nine percent. The operator operates five integrated resorts on Chinese territory. Wynn, the parent company of the company that controls the Wynn Macau and Wynn Palace sites, is down 13% this month.
Retailers embrace LVS, Wynn
A new generation of retail traders are increasingly bold and empowered, leveraging technology, internet forums and stimulus cash to make waves in financial markets. And they’re not afraid to embrace stocks mired in meltdowns.
In our last note, we argued that the appetite of retail investors to buy the downside is waning. This statement was not entirely accurate, ”said Ben Onatibia, senior strategist at Vanda Research. “They are still more than willing to buy the drop, but demand bigger discounts to deploy their unused money.”
For the five days ending Sept. 22, retail traders bought around $ 149 million worth of LVS and Wynn combined, according to Vanda. This places the two gaming stocks among the top 10 most bought stocks by retail investors in recent days.
Showing that they are not afraid of headwinds from Chinese regulations, non-professional traders are also flocking to Alibaba (NYSE: BABA), the e-commerce giant that has been punished by a crackdown initiated by the Chinese Communist Party ( PCC).
Bold, but risky
It is often said in the financial markets that “fortune favors the bold”. Boldness is no guarantee of success, however, and Macau stocks could remain vulnerable to significant global risk.
Additionally, retail traders like LVS and Wynn come up against professional investors who do not share the same views. In the wake of regulatory headlines, several banks lowered the ratings and price targets for six Macau dealerships.
Specific to Wynn, Kynikos Associates founder Jim Chanos said earlier this week that his company is running low on this stock, and despite recent declines, Wynn is not cheap. Chanos said the stock is actually expensive and is expected to be trading at around half of what it’s worth today.