Wynn Resorts Stock is a Macao Reopening Play

Casino operator Wynn Resorts NASDAQ: WYNN stock is down (-10.44%) year-to-date (YTD) compared to the S&P 500 index NYSEARCA: SPY performance being up 20.5% YTD as of Aug. 28, 2021. Investors have taken a beating on the hopes of a rebound in the leisure and hospitality industry and notably for the Macao casino industry. Wynn is the largest U.S. casino operator in Macao and the tepid relations with the Chinese government and the U.S. have made investors nervous, especially due to the unpredictable nature of travel restrictions for COVID-19. As an epicenter stock during the pandemic, it hasn’t participated in the reopening trends as the spread of the Delta variant has deterred travel until recently. Prudent investors looking for a blue-chip play in the recovery of Macao along with iGaming heading into the NFL football season can watch for pullbacks in shares of Wynn Resorts for opportunistic pullback levels to gain exposure.

Q2 FY 2021 Earnings Release

On Aug. 4, 2021, Wynn reported its Q2 2021 earnings for the quarter ended in June 2021. The Company reported an earnings-per-share loss of (-$1.12) beating consensus analyst estimates for a loss of (-$0.58), a $0.46 beat. Revenues rose 1,055% year-over-year (YoY) to $990.1 million beating consensus analyst estimates for $915.7 million. Operating revenues from Wynn Palace were $270.4 million, up from $8.7 million in the year ago period. Operating revenues from Wynn Macao were $184 million, up from just $11.4 million in the year ago period. Operating revenues for Las Vegas were $355.1 million, up from just $64.9 million in the year ago period. Wynn CEO Matt Maddox commented, "We were pleased to see the strong return of our guests at both Wynn Las Vegas and Encore Boston Harbor during the second quarter with Adjusted Property EBITDA at our U.S. operations well above pre-pandemic levels, highlighting the significant pent-up demand for travel and leisure experiences. While there have been some fits and starts along the road to recovery in Macau, we were encouraged by the strong demand we experienced during the May holiday period, particularly in our premium mass casino and luxury retail segments. On the development front, our WynnBET online casino and sports betting app is currently available in six states with additional launches planned over the coming months. We continue to enhance our product with frequent new feature releases and are advancing our marketing and branding strategy as we approach the upcoming NFL 2021 season."

Conference Call Takeaways

CEO Maddox set the tone,  “The second quarter is not a peak. It's a preview of what's to come. We've all been able to streamline our expense structure, understand how to yield our properties better, and the ability to generate significant EBITDA out of these assets is quite clear. Now clearly, the Delta variant's throwing a little bit of a curveball right now. But that will be short term, and it will subside. And what is clear is people want to have fun. They want to go to Las Vegas. And as we see conventions come back, which is going to happen, and then more international play from around the world come back, I am very confident that we will continue to see growth in our results in both Las Vegas and in Boston.

Looking at Macau, we made $67 million in EBITDA for the quarter. And Macau has been continuously sort of two steps forward, one step back. On our first quarter earnings call, we talked about the strength that we've just experienced during May in Golden Week, where we had achieved $3 million in EBITDA a day during that period. Then, however, after that call, there was a small outbreak in Guangdong that was quickly stamped out within a couple of weeks, but that greatly suppressed the volumes in June.

We did start to see a slight comeback in the middle of July to where the results were getting close to the April and May results, which really indicates that there's real pent-up demand in the region to go to Macau. Clearly, there's been another outbreak that we've all been reading about in the region. And the restrictions have stepped up quite significantly just over the last few days in terms of travel restrictions.

I think the good thing that we all have now experienced is that the Macau government acts decisively and quickly. And usually, it has been able to remedy these things and in the Greater Bay Area within a matter of weeks.” He concluded with updates on iGaming, “Looking at the interactive space, Wynn Interactive. We have an S-4 that's live right now out there. We're working very closely with the Austerlitz team on our SPAC, and that is moving forward quite well, and we're really excited about it. We put together a full robust program of new product delivery and the marketing program that we will be rolling out for NFL this year that we are excited about.”

WYNN Price Trajectories

Using the rifle charts on the weekly and daily times frames enable a precision view on the price action for WYNN stock. After peaking out at the $137.58 Fibonacci (fib) level, WYNN shares proceeded to sell-off for 11 consecutive weeks until forming a weekly market structure low (MSL) buy trigger last week above the $102.97 level. The weekly 5-period moving average (MA) flattened out at $96.42 while the 15-period MA is still falling at $112.59. The weekly stochastic crossed up through the 10-band but needs to crack through the 20-band to gain upside momentum. The daily rifle chart is uptrending with a rising 5-period MA at $98.77 as the daily stochastic rises on the full oscillation towards the 80-band. The daily upper Bollinger Bands sit at $105.60 which may pose a near-term peak before opportunistic pullback levels at the $98.27 fib, $95.74, $93.21 fib, $89.82, $87.13 fib, $84.49, and the $81.23 fib. Upside trajectories range from the $118.83 fib to the $150.53 fib level. Keep an eye on peers LVS and MGM as they tend to move together.