August is just two days old, but Wynn Resorts (NASDAQ: WYNN) has already closed lower two times in a row to begin the month, suggesting the stock may be ready to live up to its unfavorable August history.
The casino equities is trading at its lowest points in 20 months, so the arrival of August could be concerning. According to Schaeffer's Investment Research, Wynn has historically had an average decrease of 5.19% in the eighth month of the year during the previous ten years. In that time frame, Wynn's August performance was on average worse than that of just three other S&P 500 members.
"On the charts, WYNN’s 20-day moving average has steadily guides it lower since it touched an annual high of $110.38 on April 4. The security is now trading at its lowest levels since November 2022, down 13.1% in 2024,” noted Schaeffer’s. “Plus, seasonality suggests the shares are going to drop even more.”
The stock fell 6% for the week and is down 12% for the past month, despite some positive news earlier this week from the United Arab Emirates (UAE), where Wynn is developing a casino resort. A correction occurs when there is a 10% fall.
Further Alarming Indications for Wynn and Other Gaming Stocks
Given that Macau operators, including Wynn, reported gross gaming revenue (GGR) of $2.31 billion in July, the decline in Wynn's stock this week and in other gaming equities should be cause for concern.
Wynn and other gaming companies have been struggling this week, and this was made worse by a weak jobs report for July. The Labor Department said earlier today that companies added 114,000 jobs in April, significantly fewer than the 175,000 jobs that experts had predicted. Ten of the last fourteen employment reports had been revised down, and the unemployment rate increased from 4.1% to 4.3%. Currently, investors are conjecturing that the Federal Reserve will eventually cut interest rates because the economy is weakening, having waited far too long to do so. In the past, stocks have underperformed in this environment.
Sell-side analysts are still positive about Wynn for the time being, but the stock's decline and the operator's upcoming second-quarter earnings release on August 6 may cast doubt on that belief.
“There’s plenty of optimism to unwind amongst options traders and analysts as well. Of the 14 analysts in coverage, 11 recommend a ‘strong buy’ rating, while its 12-month consensus price target of $123.67 is a 55.9% premium to current levels,” added Schaeffer’s.
Not Just August Gaming Offender, But Also Wynn Stock
Among gaming equities, Wynn is not the only one that has trouble in the eighth month of the year. According to Schaeffer's, Las Vegas Sands (NYSE:LVS) has averaged a 3.15% August decrease over the last ten years.
Similar to competitor Wynn, Sands has had among the worst August performance among S&P 500 components over the last ten years. Like Wynn, Sands' shares fell 2.86% this week, so the Macau July GGR report didn't help it either.
Although Sands doesn't operate any casinos in the US, unlike Wynn, this hasn't stopped the stock from falling 10.55% in the last month.