Churchill Downs Stock: Could Tariff Fears Dampen Derby Gains?

Key Points

• Churchill Downs Inc. reported record revenue of $642.6 million, up 51% year-over-year, but the stock sold off more than 16% after the announcement.
• The company paused a $1 billion renovation project due to tariff uncertainty.
• CHDN stock has a history of getting a “Kentucky Derby lift” and with the sell-off looking like an overreaction, the stock could present an intriguing buying opportunity.

Churchill Downs Inc. NASDAQ: CHDN delivered record revenue and solid earnings in the just-ended quarter. However, some unexpected news about a previously announced renovation is causing the stock to drop more than 16% in after-hours trading. For a stock that’s not prone to such big news, it’s important for investors to see if this sell-the-news event could turn into a buying opportunity.

Churchill Downs is a racing, online wagering, and gaming entertainment company that is anchored by its flagship asset, Churchill Downs, the home of the Kentucky Derby. The company is home to TwinSpires, an online sports betting platform.

What all this means to investors is that the company has many avenues to generate revenue, and that’s what happened in the current quarter. Churchill Downs generated a record $642.6 million in revenue. That was up more than 51% year-over-year (YoY). However, analysts were hoping for more. On the earnings front, the company delivered earnings per share of $1.07, which missed expectations for $1.16 and was also lower on YoY.

An Unexpected Tariff Casualty

You wouldn’t expect a gaming company to be impacted by tariffs, but renovations require materials. And when a company no longer has cost certainty, those renovations get put on the back burner. That’s the case that Churchill Downs finds itself in. The company announced that it is pausing a multi-year renovation that it had only recently started.

The $1 billion project was expected to bring numerous changes to the infield around the legendary racing track and its multi-story Sky Terrace along with other smaller projects. The project was backed by local government officials and is being funded by up to $1.2 billion in bond proceeds.

And tariffs were the reason. In a press release, the company remarked, "The decision to delay these construction projects is due to the increasing uncertainty surrounding construction costs related to tariff and trade disputes as well as current macro-economic conditions.”

The project was supposed to be completed in 2028 with the first renovations being completed in time for next year’s Kentucky Derby. That schedule will have to wait as the company waits for clarity.

However, Churchill Downs isn’t abandoning its ambitions entirely. The company announced two smaller projects that will cost between $25 million and $30 million. Both projects are expected to be complete in time for the 2026 race.

Could This Selloff Lead to a Strong Comeback?

Churchill Downs stock has a history of getting a “Kentucky Derby” lift. This means the stock has a pattern of rallying higher in May after the venue’s signature event, The Kentucky Derby. The sharp sell-off after the company’s earnings puts that in jeopardy.

But as the saying goes, you can’t call it a comeback if you don’t spot them a lead. Like a horse that makes a charge on the final straightaway, investors have to decide if CHDN stock is oversold after the announcement of the pause in renovation.

It would seem so. As stated earlier, CHDN stock is not known for being volatile. With investors still in an anxious mood, any announcement of tariff trouble is likely a sell signal. That’s been particularly true with consumer discretionary stocks, which have been trading lower in 2025 over concerns about a weak consumer.

However, many analysts believe that sports betting is recession-resistant. These sin stocks have appeal because those who are prone to betting on sports will continue to do so even if the economy is struggling.

And the CHDN stock chart, shows the stock closed on April 24 with its Relative Strength Index at 27, which suggests oversold conditions. Finally, analysts aren’t buying into the bearish narrative. Although several analysts have lowered their price targets in the last week, there’s nothing to suggest a price anywhere close to its closing price of $88.06 on April 24.