Caesars Entertainment Stock Plummets Following Disappointing Q1 Results

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As the day’s trading wrapped up on Tuesday, Caesars Entertainment Corp.’s stock had navigated a dismal path, stumbling lower in the after-hours session. The downward jaunt reflected an extension of the day’s decline, with a 4.66% dip registered during normal trading hours.

This plummeting of stock value comes on the heels of the casino operator’s first-quarter results, which turned out to be a substantial disappointment, as it fell considerably short of Wall Street’s projections. The venues under the purview of this operator include the iconic Caesars Palace in Las Vegas, as well as a suite of regional casinos.

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The first quarter, for Caesars Entertainment, was a tumultuous stretch; it reported a per-share loss of 73 cents on revenues hitting $2.74 billion. Contrarily, market analysts had projected a loss of just eight cents per share, and a more robust total sales figure of $2.83 billion.

The sour results come as the gaming giant is struggling under the weight of less-than-favorable outcomes in the Super Bowl and NCAA Tournament. Some within the industry, however, believe that these factors merely scratch the surface of the underlying issues, and have begun putting Caesars’ operational performance, specifically in Las Vegas and its regional casinos, under a microscope.

For the flagship venue in Las Vegas, the situation seems to be getting complicated. The gaming company revealed a substantial decrease in revenue to $1.03 billion in the first quarter, compared to last year’s initial-quarter figure of $1.11 billion. Along with the revenue, the adjusted earnings (prior to interest, taxations, depreciation, and amortization) at these Las Vegas casinos also dwindled from last year’s $533 million to $440 million this year.

This pattern of decline has given the market a reason to worry that Las Vegas might be experiencing a slowdown after a period of pent-up demand fueled by the easing of coronavirus-related restrictions.

Moreover, the company’s regional venues did not fare any better. In this first quarter, they reported adjusted earnings of $443 million on a revenue of $1.37 billion, mirroring a dip from last year’s results. Analysts speculate that these underwhelming results are attributable to a combination of factors, including inclement weather in January that dissuaded potential visitors, as well as a decline in the number of low-tier bettors frequenting southern gaming venues.

Steps are also being taken, albeit slow, to tackle one of the industry’s largest bugbears – debt. The company revealed as part of its first-quarter update that it had marginally reduced its financial liabilities over the four-month period leading up to March 31st, bringing it down to $12.436 billion from a previous figure of $12.439 billion.

Despite a rocky start to the year, Tom Reeg, Caesars CEO, maintained an air of optimism for the rest of the year in his statement: “After navigating through the headwinds of the first quarter, we are hopeful for improved operating results throughout the year.”

As such, the year ahead for Caesars seems to be marked with both challenges and optimism. Whether the gaming giant manages to parlay its fortunes in its favor remains to be seen.