Casino operator Las Vegas Sands (NYSE:LVS) stock has fallen to its COVID-19 low levels in recent weeks. The epicenter stock has seen renewed fears of China intervention with the Macau gambling industry as well as COVID-19 protocols tightening again.
Gambling is one of the few industries that doesn't suffer from supply chain disruption. Shares have given back all the gains from the reopening phase. Chinese President Xi Jinping's initiative on cracking down on corruption has made its way to Macau as it considers placing its agents in the casinos to oversee potential irregularities.
Gambling is illegal in China and only legal in the Macau region. It is speculated that nearly 50% of Macau's gambling revenues are derived from Chinese officials who have led to corruption and embezzlement charges.
The arrest of the largest Macau junket operator Alvin Chau of Suncity Group Holdings symbolizes how serious the crackdown and regulatory reforms on cross-border gambling are. Prudent investors seeking to capitalize on the fears can watch for opportunistic pullback levels in shares of Las Vegas Sands.
Q3 FY 2021 Earnings Release
On Oct. 20, 2021, Las Vegas Sands reported its Q3 2021 earnings for the quarter ended in September 2021. The Company said an earnings-per-share loss of (-$0.45) falling short of consensus analyst estimates for a loss of (-$0.26), a (-$0.19) miss.
Revenues rose 92.2% year-over-year (YoY) to $857 million but still missed analyst expectations for $1.21 billion. Casino revenues grew 90% YoY to $533 million. Rooms revenues rose 186% YoY to $100 million. Las Vegas Sands CEO Robert G. Goldstein commented,
"While heightened pandemic-related restrictions impacted our financial results this quarter, we were able to generate positive EBITDA in each of our markets. We remain enthusiastic about the opportunity to welcome more guests back to our properties as greater volumes of visitors are eventually able to travel to Macao and Singapore.
We also remain deeply committed to supporting our team members and to helping those in need in each of our local communities as they recover from the impact of the COVID-19 pandemic. We remain confident in the eventual recovery in travel and tourism spending across our markets.
Demand for our offerings from customers who have been able to visit remains strong, but pandemic-related travel restrictions in both Macao and Singapore continue to limit visitation and hinder our current financial performance.
Our industry-leading investments in our team members, our communities, and our market-leading Integrated Resort offerings position us exceedingly well to deliver growth as these travel restrictions eventually subside and the recovery comes to fruition. We are fortunate that our financial strength supports our investment and capital expenditure programs in both Macao and Singapore, as well as our pursuit of growth opportunities in new markets."
Conference Call Takeaways
CEO Goldstein kept comments brief,
“Our results continue to reflect the pandemic's impact. Heightened restrictions directly impacted our results in both Macao and Singapore this quarter. We did generate positive EBITDA for the quarter in both markets. We remain confident in the eventual recovery in both Macao and Singapore.
Singapore gaming operations are closed for a portion of the quarter, enhanced restrictions were in place throughout the remainder of the quarter. The good news in Singapore, the travel quarters are being established with the number of source markets, which hopefully will contribute to the strong recovery of the time.
Our considerable investments in Macao continue to take shape. As the market recovers, we believe that Four Seasons in London will present a growth opportunity in the future. The spend in Macao has proven both resilient, the premium mass level from both the gaming and retail perspective you can see on Page 29, 30 in your deck.
We have great optimism about our ability to perform to a pre-pandemic level once visitation has returned. Our Company is divided into 3 areas. Most importantly, the Asia portfolio, Macao and Singapore, remain confident we will return to a strong positive cash flow in both Macao and Singapore in the future as restrictions or fees in traveling tours recover.
The sale of our Las Vegas assets creates liquidity and optionality as we pursue large-scale land-based destination resorts in both U.S. and Asia. We will continue to build out our digital presence and we're exploring multiple opportunities we'll achieve in the appropriate time in future.”
LVS Price Trajectories
Using the rifle charts on the weekly and daily times frames enables a precision view of the price action for LVS stock. The weekly rifle chart peaked at the $43.23 Fibonacci (fib) level before falling sharply on the weekly stochastic mini inverse pup. The weekly downtrend has a falling 5-period moving average (MA) at $37.54, with lower Bollinger Bands (BBs) at $33.22.
The weekly 15-period is falling at $38.91. The weekly market structure low (MSL) buy triggers a breakout through $39.21. The daily rifle chart has a breakout attempt as the 5-period MA at $37.65 crossed up through the 15-period MA at $37.44 on the stochastic mini pup through 50-band.
The daily upper BBs sits at $43.37. Prudent investors can watch for opportunistic pullback levels at the $35.10 fib, $34.36 fib, $32.87 fib, $30.79 fib, and the $29.46 fib level. Upside trajectories range from the $42.58 fib to the $47.19 fib level.