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Major casino stocks hit new all-time lows today, their shares pulverized by panicking investors on a day when global markets plunged.
Except for MGM Mirage, whose shares are up less than half a point. The company has one of the lighter debt loads in the industry, relative to earnings, in spite of its massive CityCenter joint venture. It also has the assistance of a very wealthy man, majority shareholder Kirk Kerkorian, who has indicated that he won't be bailing out of the company and might actually put more of his resources there.
Investors will find out more when the company reports earnings next Wednesday.
Wynn Resorts fell more than 13 percent to $36.59, Las Vegas Sands fell 23 percent to $6.32 and Boyd fell more than four percent to $4.01. At these prices, you'd think earnings at these companies had been cut in half, if not by two thirds instead of the 20 to 30 percent range.
Then again, this is more of a loan crisis than an earnings crisis.
Gaming companies are restructuring their bank loans because they are falling short of bank requirements that they generate enough cash relative to their outstanding loan debt. The major companies are still able to make interest payments on the debt.
The stock with the biggest debt to earnings ratio of the major casino companies is Las Vegas Sands, which is one reason why the company – after receiving a cash infusion of $475 million from CEO Sheldon Adelson – today announced a plan to raise additional capital from an unnamed investment bank.
Though it seems unlikely that banks will force Las Vegas Sands or any of the other major companies into Chapter 11 bankruptcy, investors aren't waiting around to find out. They are ditching the gaming industry because it depends on major loans from banks to survive and thrive. Others are forced sales by hedge funds that have dissolved in the market meltdown.
In the words of a Deutsche Bank report coauthored by the firm's Chief U.S. Economist Joseph LaVorgna and issued today, "There is little precedent in the modern era for the type of seizing up in financial markets which has occurred over the past month."
What sector isn't being tested right now?
More people are going to lose jobs in Las Vegas. Not just in the Casino's but in every retailer and even government employees. We exist on the visiting public and they are broke from playing NO jackpot slots at home called gas pumps. The leader in keeping energy up is harry Reid and soon to be Obama. No drilling, no nuclear, no coal, no economy. Gas is down today but will soar at the first sign of recovery anywhere. Now Barney Frank is about to have a Senate to go along with him as he legalizes internet gambling to further erode our visitors.
http://www.house.gov/apps/list/press/fin...
Perhaps it is wishful thinking on my part, but I am thinking that the drop of gas prices will cause a return in the volume of tourist coming to Las Vegas.
It is too sad that many airlines cut back on flights to Las Vegas which makes such rebound harder to pull off.
But the cars coming from CA should go up.
The pressures on prices increases in airfare should stop.
If the world economy rebounds then gas prices will go back up because we will return to the situation where supply capacity is just barely above peak summer demand. I do not think the world economy will recover until 2 to 3 years at the earliest. Gas should be cheap for the next couple of years.
Perhaps casino stocks are cheap now and it is a good time to buy into smart casino stocks.
The drop in gas prices is minimal compared to lost wages, via cutbacks and layoffs. Increased inflation is also a drag on the pocketbook. The huge increase a few months ago was the catalyst to unstability, but that train has left the track and is running too fast to stop. Am not looking for any improvment until the 4th quarter of 2009.
The markets are terrified because America is about to elect the most radical socialist that any major political party has ever nominated.
Obama has proposed 1.3 trillion dollars in new spending (he is a predator, he will give the money to his friends).
Obama will pay for it by allowing the Bush Tax Cut to expire (and the media will not mention it, just like they didn't report the fact that 85% of Americans were against the Bailout before the second vote. And Congress quietly passed what was an enormously unpopular bill. The media is in essence controlling our country.) (Very scary when you consider their terrible track record in the good government department).
We won't find out about it until we get our next paycheck and are horrified to find muchos dineros mysteriously missing.
Obama's repeated promise that 95% of us will not pay more taxes is simply a lie. He plans to allow the Bush tax cut to expire which is politican talk (aka a lie) for not raising taxes.
NO, HE'S NOT RAISING THEM BUT WE WILL BE PAYING MUCH MORE. AND TAKING HOME MUCH LESS.
INCOME TAX FROM IRS.gov
MCCAIN (no changes)
Single making 30K - tax $4,000
Single making 50K - tax $12,000
Single making 75K - tax $18,000
Married making 60K- tax $9,000
Married making 75K - tax $16,750
Married making 125K - tax $30,250
OBAMA
(reversion to pre-Bush tax cuts)
Single making 30K - tax $8,400
Single making 50K - tax $14,000
Single making 75K - tax $23,250
Married making 60K - tax $16,800
Married making 75K - tax $21,000
Married making 125K - tax $38,750
Under Obama your taxes will more than double!
JoinAmerica, why do you keep lying?
From the Tax Policy Center's analysis:
"Obama's plan would keep the 2001 and 2003 tax cuts in place for everyone except those making more than roughly $250,000, and he would increase the capital gains tax."
"Obama would also introduce new tax breaks for lower and middle-income groups. Such breaks include expanding the earned income tax credit, giving those making less than $150,000 a $500 tax credit per person on the first $8,100 in income, giving those making under $75,000 a 50% federal match on the first $1,000 of savings, and exempting seniors making less than $50,000 from having to pay income tax."
http://money.cnn.com/2008/06/11/news/eco...
That page has a handy chart that disproves you.
joinamerica: "The markets are terrified..."
Do you righties fear everything? You guys seem to mention fear all the time these days. What a bunch of cowards you've turned out to be.
Lower gas prices are not gonna cause people to increase there gambling in Vegas-or anywhere else. The economy is so terrible because credit is so restricted. People can't sell there houses because there aren't enough buyers who's credit qualifies them for a mortgage. There is virtually no descressionary money in the current economy for gambling-for starbucks or anything other than the basics. I got a feeling some of these mega resorts are not gonna make it. They got a boat load of debt with these banks and these casinos are empty & not spinning off enough cash to pay back their banks. The next 3 years are gonna be brutal in Vegas.
We need to keep gas prices down for this country to have any chance to recover, this year or in the future. Why does Nancy Pelosi swear no drilling on her watch, why does Biden swear no coal for America, why does Obama say no nuclear. The rest of the world is building and drilling them all and our economy rots and now video shows Obama blames WHITE people for the problems, watch him in his own words.
http://www.redstate.com/diaries/redstate...
just wait and see how dead this town is here in the next 2 or 3 months. people are going to have to choose between coming to vegas or buying xmas gifts.
they'll go with xmas gifts for their kids.
most americans don't have the $500 - $600 to blow on a vegas vacation anymore and vegas hasn't really done much to give them a reason to come. other than the wynn and palazzo ( yawn ) there really hasn't been anything new to bring people in since the palms in 2001.
The people coming with 500/$600 can't afford the 'new Vegas' and certainly not the Wynn or Palozzo - nor would that afford anything at any other new Casino that would be constructed.
If you want Obama to win, then copy this link and send it to everyone you know. No true animal lover will vote for McCain/Palin after watching this short ad:
http://www.defendersactionfund.org/
What we are experiencing here in Nevada is a fundamental breakdown of trust with tourism. Not just state to state but nation to nation.
Yes gas prices have sky-rocketed and not because of supply deficiences. It's about regulating and accounting for Exxon/Mobil and other oil companies record surge in profits. 23 billion plus for XON in the first 6 months of 2008. Hey guys that great sucking of dollars has collapsed the economy. Now you see this price gouging manipulation move to bring prices down right around election time. It is what it is - price manipulation not supply and demand issues.
On the other note.. We need alternative inexpensive clean burning fuels to keep tourists coming back. This is a long term issue that will not be addressed by a war mongering leader like John McCain.
Global warming and the unprecedented fires in California have left Nevada one of the worse toxic fallouts around. Any tourist who found himself covered in the fall out of Cal's fire is probably not going to return anytime soon.
Nation to nation fundamentals. Tourism is about hospitality anyone thinking John McCain and his power abusing Caribou/Wolf shooting war mongering side kick Sarah Palin is going to win friends and influence enemies in the tourist countries has been buying the swampland of Bush and Cheneys failed policies.
Obama will give relief to the middle class and put more money in their pockets. That is what this economy thrives on.
The other great financial sucking noise we should hear is the 10 billion a month to finance the war in Iraq plus the loss of jobs here at home due to corporate outsourcing.
When these two areas are corrected the AMERICAN SHIP will right itself.
Obama is the Captain needed for just such a change.
I cannot believe that Vegas Casino's have turned their back on the middle-aged/ middle-class gamblers that made Vegas what it is today. This is one of the resons Vegas business is down.
I have 3 adult kids in their 20's and have gone out to Vegas with us at least twice each. They all come back saying it was OK, but way too expensive and doubt they will go back. Eating at the Casino's has gotten outrageous and out of whack with what the average person can afford. Why do they continue to "Up-Scale" their restaurants and hotels to the point of only being able to attract customers that make over $200,000 a year?
I am so tired of seeing on the Travel Channel about Vegas and "The Whales", just how many of those do they think are out there? Vegas was for the middle-class masses, but now all's they want is the young crowd that can barely afford the plane ticket and are living at home in record numbers until they are in their middle 20's because they cannot afford to move out.
You are absolutely correct and Vegas should pay attention. Get back to the basics of Casino adult gambling fun and try promotions that will bring the middle-class/middle-aged customer back and you will see Vegas thrive again.
These are the types of customers that come 2 and 3 times a year and actually "Gamble". The Strip Casino's have all but lost this business, these customers in record numbers are going downtown and to the local Casino's to gamble. I have been coming for over 15 years and have changed to this type of gambler myself.
I use to love Steve Wynn's properties "The Gold Nugget" and "The Mirage", but when we visited his new "Wynn", well"it's obvious he has gotten so rich off of the "Middle-Class" that he has also left us behind. His new Casino was cold and so up-scale that I will never go back. This is a lesson that all the Strip Casino's should realize. The middle-class are the ones who made Vegas, if you turn your back on them, they will turn their back on YOU!
Yeah the gas prices are coming down - too little too late !!
For those of us coming thru from L.A.
Here's some hard to swallow facts :
1) HWY 15 is a disgrace !!
2) We bought property here and got hammered.
3) We invested here and our money was stolen by Donald McGann / SouthWest Exchange.
And the cherry on the cake !!
4) Drive in from Barstow - watch how many HWY Patrol units there are and watch how many tickets they are writing !!
We're all talking about it in L.A - literally thousands of us and we've had enough.
"Biting the hands that feed Vegas"
How smart is that !!
Not even Good old Oscar ( god love him - he's a trier ) will be able to sort out this mess.
Keep writing the tickets boys - see how that helps the Tourism dollar.
Las Vegas' turn away from the middle income gambler and toward the nouveau riche could be a good explanation for the slowdown in Vegas tourism. (One thing, though, the new rich is filthy rich, making them mostly recession-proof.) In any event, I'm a middle income gambler and migrate to Wendover up north, driving over from the Wasatch Front, Salt Lake, etc. The casinos in Wendover are for the middle income gambler and they are packed every weekend . . . with gamblers. No slowdown up north . . .
First I will always believe in Las Vegas. There will be some turmoil and maybe some restructuring but LV will recover more or less intact in time.
Right now LV is fighting one force - the idea that its some kind of luxury. Y'all need a new ad that does something that the Chamber of Commerce doesn't seem to like - compete based on price. You need a series of ads.
A split-screen showing cruise passengers with limited on-board choices and add-on prices getting the final bill for their trip. Contrasted with tourists hitting the town in LV - going to shows, eating their fill and, of course, winning money.
A convention member arriving in a snowy city, getting the bill for room service hamburgers and pay-cable movies - contrasted with attending a luau with scantily-clad dancers, filling his plate at the buffet and, of course, winning money.
You get the idea. An aggressive campaign that says "Saving money should be fun." or "Providing bargins for 70 years."
Americans always spend more money on entertainment (movies, sports) when times are tough - now is the time to capitalize on that.