Revenue up, share price down

Despite rising costs of living and fears of a recession, this year has proven another record period in the US gaming space. Shortly after operators reported the highest quarterly revenue on record in Q3, the American Gaming Association predicted that 2022 is “on pace to surpass 2021 as the highest-grossing commercial gaming revenue year ever.” 

almost all of the biggest names in US gaming have lost value

In such a successful year for US gaming, you could be forgiven for predicting that the stock of the nation’s gaming companies might have risen substantially. You would be sorely mistaken. Owing to a variety of issues, almost all of the biggest names in US gaming have lost value over the course of 2022. Industry stock has fallen by around 35% for the year-to-date.

As we approach the fresh start that a New Year will bring, VegasSlotsOnline News has taken a look at 2022 share price shifts to rank the year’s biggest losers and assess why they have lost value. From casino kings to sportsbook powerhouses, these firms have all taken a dive over the past 12 months.

5. Boyd Gaming

In 2021, Boyd Gaming was one of VSO News’ biggest winners as its share price grew by 39% to $65.57. The land-based gambling giant’s fortunes have changed in 2022, however. Its share price fell from $63.52 on January 3 to $55.75 on December 21, 2022 – a decline of 12%. So, why the shift, particularly given the operators continued year-on-year revenue rise each quarter?

Founded in 1975, Boyd has created an empire of gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. The company now has a strong online segment to boot and this year acquired Pala Interactive in a $170m deal to boost that further.

up 58% over the past five years

Given these promising signs, analysts assert that the reduction in Boyd share price seems more a leveling out than a significant change. The operator performed so well in 2021 that the price had to drop at some point. Notably, Boyd Gaming stock is still up 58% over the past five years. The peak of that time came in February this year when the price reached $69.57.

While the current price of $55.75 marks the lowest point since 2021, its still no where near the trough of $11.60 seen in March 2020 when the pandemic hit. Stock experts are even toting Boyd as a solid investment owing to its expansion efforts, FanDuel partnership, and Pala purchase. It has also outperformed much of the industry despite the year-to-date decline.

4. MGM Resorts International

MGM Resorts International is a company synonymous with the US gambling space. This year has proven tumultuous for the casino giant – its stock dropping 22% from $44.53 to $34.57 for the year-to-date. This seems at odds with the company’s 2022 performance, recently growing its Q3 revenue to $3.4bn – a 26% y-o-y rise.

Primarily, the drop in MGM stock is related to its business outside of the US. MGM China, the company’s Macau-based subsidiary, has struggled with continued pandemic restrictions like the rest of the Special Administrative Region’s casino operators. In November, the operator even had to secure a $750m loan from its parent company to combat issues in Macau.

This loan could prove a solid investment given that analysts believe growth could be on the horizon for MGM China. The Macau government just abolished quarantine measures for all arrivals. MGM China has also received one of six ten-year concessions in Macau, something that caused its shares to soar 11%. MGM China said it will invest approximately $2bn in Macau over the next decade, with 50% as capital expenditures and the remaining on operating expenses.

BetMGM also continues to make significant progress, adding Kansas to its list of operational states in Q3. The operator controls a 29% share of the US online casino gambling market.

These positive moves are already reflected in MGM Resorts stock, which has risen around 27% in the past six months.

3. Penn Entertainment

Penn Entertainment is among the worst performing gaming stocks of 2022. The operator’s value fell from $47.28 in January this year to just $31.41 by the year’s end. That’s a drop of 34%. It’s certainly been a difficult couple of years for the operator, which actually made number one in VSO News’ losers of 2021 list.

allegations of sexual misconduct

Part of Penn’s decline can be attributed to its acquisition of Barstool Sports and its association with controversial public figure Dave Portnoy. Barstool founder Portnoy faced allegations of sexual misconduct last year, and the New York Times described him as a “degenerate gambler” in 2022 – both claims that he has denied.

Earlier this month, the involvement of Dave Portnoy in Barstool’s operations stalled the approval of its Massachusetts sportsbook license. The Massachusetts Gaming Commission ultimately gave it the greenlight this week, but not before it had brought into question the suitability of Portnoy as an example to potential Barstool customers.

Outside of Barstool, Penn has actually made some progress in 2022. The operator’s Q3 revenue increased around 8% from 2021, while its net income grew by 44% to $123m. Its share price has also improved since the middle of the year, growing around 17% from June.

2. Caesars Entertainment

Earlier this month, the Bank of America cited less overall credit card activity, flattening spend on gaming, and declining casino visitation as reasons for downgrading Caesars Entertainment stock. In total this year, the American casino giant’s shares have dropped around 50% in value, from $89.66 in January to $44.91 by the end of the year.

Primarily, the Bank of America pointed to two indicators of trouble for Caesars. Firstly, gaming visitation dropped over the course of the year. While it increased month-on-month at the beginning of 2022, October and November saw year-on-year declines by 6% and 4%, respectively. It was a similar story for gaming revenue, which has also slowed to just 1% growth over the same months.

integration of Eldorado Resorts and sports betting firm William Hill

That said, there were certainly positives for Caesars in 2022. The company has rebounded from the pandemic well utilizing the integration of Eldorado Resorts and sports betting firm William Hill. It was also able to sell the international operations of the latter to 888 Holdings in a deal worth ￡1.95bn ($2.35bn) earlier this year.

For Q3 2022, Caesars also set a new quarterly record of more than $1bn for adjusted earnings before interest, taxes, depreciation, and amortization. The operator labeled October its “strongest month ever” for Las Vegas business due to high occupancy levels and improving international travel. With all that in mind, it could be that Caesars stock is currently a solid buy at a great price.

1. DraftKings

Last year, sports betting giant DraftKings made VSO News’ top list of share price losers with a drop of 40%. Now, the company has topped the list with another decline of around 57%. DraftKings shares have fallen from $27.24 in January to $11.77. To put that into context, the operator began 2021 at a price of $44.86 – 74% higher than its current value.

Of the US’s gaming operators, DraftKings has seen the highest loss of investor faith since the end of the pandemic. This seems at odds with its revenue performance. In November, DraftKings actually raised its revenue guidance for 2022 to $2.19bn, up from its earlier estimate of between $2.08bn and $2.18bn.

The sportsbook has fallen short in other regards, however. For the third quarter, DraftKings reported a net loss of around $450m or $1 per share. Its monthly unique paying customers for Q3 was short of the 2 million projected by around 400,000. The operator also had to refund $300,000 to customers who had lost funds in a hacking breach.

Ultimately, analysts agree DraftKings is struggling to gain a competitive advantage in an increasingly difficult US online betting sector. DraftKings faces the challenge of having to compete through substantial marketing spend while balancing cash flow with growth. Its a tough task for all operators in the space, and some have closed up shop for good in the face of this adversity, including most recently FuboTV.

The descent of DraftKings stock must cease at some point, but the forecast still seems unclear for the battle-worn betting giant.