Las Vegas casino companies’ stock drops in 2018

Last year, most gaming companies in Las Vegas posted their worst stock market performance since the Great Recession in 2008.

US.- In 2018, gambling companies posted their worst performance since 2008 as the Dow Jones U.S. Gambling Index (made up of top Las Vegas gambling stocks) was down 33%. Despite kicking off the year with major gains, most gambling companies ended up on the losing side as their stock values tumbled.

Corporate and personal income tax cuts were signed into Law early in 2018 and caused companies’ shares to go up for a few months. However, the trade war between the US and China had a major impact on the industry’s performance.

“The top 10 China provinces by visitors to Macau had combined about $294 billion of exports to the U.S. in 2017, so we believe the trade war could hurt consumer and business confidence of players coming from key source markets in China,” UBS analysts Robin Farley and Arpine Kocharyan wrote after President Donald Trump set tariffs on US$34 billion of Chinese goods in July, generating China’s retaliation and a further US response with additional tariffs.

In addition to the trade war’s consequences, a potential recession also meant bad news for gaming companies in the US. As tax cuts drove the Federal Reserve to increase rates four times in 2018, recession fears surged and impacted on share value.

Despite the downward trend, one company managed to go up against the stream and posted a 9% increase during 2018: Eldorado Resorts.

As 2019 kicked off this week, gaming analysts forecast the gaming industry to recover from last year’s performance.

“We are positive on domestic gaming in 2019, given underperformance, a good consumer backdrop, and pockets of defensive exposure if a recession is more likely,” Credit Suisse analyst Cameron McKnight said, as quoted by Las Vegas Review Journal.