Why Wynn Resorts Shares Are Falling

Shares of Wynn Resorts, Limited WYNN are trading lower by 2.97% to $103.25 Tuesday morning, dragged down by a major selloff in Chinese markets that saw the Hang Seng Index drop over 9%, its steepest one-day loss since the 2008 financial crisis.

The downturn, fueled by disappointment over the lack of bold fiscal stimulus measures from the Chinese government, could spark fears that the recovery in Macau's vital gaming and tourism sectors, where Wynn Resorts generates revenue, may face prolonged delays.

What To Know: Wynn Resorts, a global leader in luxury hospitality and gaming, operates two major resorts in Macau—Wynn Macau and Wynn Palace. With a portion of revenue tied to its Macau properties, the company’s stock is sensitive to developments in China's economy.

Read Also: PepsiCo Adjusts 2024 Revenue Expectations After Mixed Q3 Performance And Global Challenges

Investors had been optimistic about a robust rebound in Macau's gaming sector, as China’s post-pandemic recovery appeared to be gaining momentum. However, the sharp market decline and the absence of aggressive economic stimulus from Beijing have raised concerns about a possible slowdown in Macau's recovery.

The selloff was driven by widespread investor disappointment after China’s National Development and Reform Commission (NDRC) failed to announce the large-scale fiscal stimulus that many had hoped for. Investors were expecting trillions of yuan in new bond issuances or significant consumer-stimulating measures to support China's slowing economy.

Instead, the NDRC's announcements were limited to relatively modest measures, such as a front-loaded budget for construction projects, leaving investors underwhelmed and triggering a wave of profit-taking across Chinese markets.

Read Also: Disney Faces $150M-$200M Blow From Hurricane Milton, Attendance Set to Drop 6%, Says Goldman Sachs

What Else: This has significant implications for Wynn Resorts, which relies heavily on high-end tourism and gaming in Macau, particularly from wealthy Chinese visitors. Macau’s gaming industry has been gradually recovering from the effects of the COVID-19 pandemic and the region’s stringent lockdown measures, but the pace of recovery has been uneven.

With Chinese consumer sentiment now threatened by weaker-than-expected economic support, there are concerns that Macau's gaming revenues could face additional headwinds.

The downturn in offshore Chinese stocks, particularly in sectors like technology and property, added to the overall market pressure on companies like Wynn. The stock decline reflects broader concerns about slowing economic activity in China, which could reduce consumer spending and discretionary travel to Macau, directly impacting Wynn’s high-end gaming and luxury resort operations.

Wynn Palace and Wynn Macau cater to affluent tourists and VIP gamblers, sectors that are especially sensitive to economic fluctuations in mainland China.

Read Also: As Florida Prepares For One Of Deadliest Hurricanes, Here Are Some Potential Stock Winners And Losers From Milton Threat

Is WYNN A Good Stock To Buy?

When deciding whether to buy a stock, there are some key fundamentals investors may want to consider. One of these factors is revenue growth. Buying a stock is essentially a bet that the business will continue to grow and generate profits in the future.

Wynn Resorts has reported average annual revenue growth of 18.81% over the past 5 years. .

It's also important to pay attention to valuation when deciding whether to buy a stock. Wynn Resorts has a forward P/E ratio of 19.01. This means investors are paying $19.01 for each dollar of expected earnings in the future. The average forward P/E ratio of Wynn Resorts's peers is 26.91.

Other important metrics to look at include a company's profitability, balance sheet, performance relative to a benchmark index and valuation compared to peers. For in-depth analysis tools and important financial data, check out Benzinga PRO.

WYNN has a 52-week high of $110.38 and a 52-week low of $71.63.