As August begins, Wynn Resorts (NASDAQ: WYNN) has experienced consecutive lower closes, signaling that the stock could be on track for a difficult month. Historically, August has been challenging for Wynn, with an average decline of 5.19% over the past decade, as noted by Schaeffer’s Investment Research. Only three other S&P 500 members have performed worse in August during this period.
Wynn Resorts’ stock, which includes properties such as Wynn and Encore on the Las Vegas Strip, is now trading at its lowest levels in 20 months. Since reaching an annual high of $110.38 on April 4, Wynn’s 20-day moving average has persistently moved downward. The stock has declined 13.1% in 2024 and is at its lowest point since November 2022. According to Schaeffer’s, seasonality indicates that the shares are likely to decline further.
Despite some positive developments from the United Arab Emirates, where Wynn is building a casino resort, the stock has dropped 6% this week and is down 12% over the past month. A decline of 10% is typically viewed as a correction.
This week has been tough for Wynn and other gaming stocks, despite Macau operators reporting gross gaming revenue (GGR) of $2.31 billion in July. A weak July jobs report has compounded these difficulties. The Labor Department reported today that employers added only 114,000 jobs last month, significantly lower than the expected 175,000. The unemployment rate increased to 4.3% from 4.1%, and 10 of the last 14 employment reports have been revised downward. Investors are now speculating that the Federal Reserve may have delayed lowering interest rates for too long and that when it finally does, it could be in response to a weakening economy, a scenario historically tough for stocks.
At present, sell-side analysts remain bullish on Wynn, but this could be tested by the stock’s current weakness and its second-quarter earnings report, which is scheduled for August 6. Schaeffer’s notes that there is ample optimism among options traders and analysts. Out of 14 covering analysts, 11 recommend a ‘strong buy’ rating. The 12-month consensus price target is $123.67, a 55.9% premium over current levels.
Wynn is not the only gaming stock facing difficulties in August. Las Vegas Sands (NYSE: LVS) has also averaged an August decline of 3.15% over the past decade. Similar to Wynn, Sands has been one of the worst-performing S&P 500 components in August over the past 10 years. Sands, which does not operate any US casinos, has seen its shares drop by 2.86% this week and fall 10.55% over the past month, even with the Macau July GGR report.
