One of the worst-performing sectors since 2014 has been the casino industry.
The sector — and specifically Wynn Resorts Limited (NASDAQ:WYNN) — has been searching for a catalyst and got not one but two on Monday.
The price action following the news makes it the PreMarket Prep Stock of the Day.
Dead Money Since 2014: Wynn Resorts made its all-time high in March 2014 at $248.31. It went into free fall until it bottomed in October 2015 at $50.96. It managed to rebound to the $200 area in the early part of 2018 but was submarined when its founder Steve Wynn had to resign amidst sexual misconduct allegations.
The COVID-19 pandemic pushed the issue to nearly an 11-year low when it bottomed in March 2020 at $35.84. The rebound off that low came to an abrupt halt well ahead of the broad market, when it peaked in March 2021 at $143.88.
The issue bottomed like so many other issues in June at $50.20 and was not far from that low as it ended last week at $58.30.
Primary Catalyst For Wynn: Before the open, billionaire Tilman Fertitta announced a stake in the hotel and casino company. Fertitta is very familiar with the industry as he controls other and more successful properties in Macau and on the Las Vegas strip.
In a 13-G filing, Fertitta disclosed he owned 6.9 million shares of Wynn, giving him a 6.1% stake. Only co-founder Elaine Wynn has a larger stake in the company.
In addition, China announced an e-visa system for Chinese tourists to make it easier to travel to Macau.
PreMarket Prep's Take: When the issue was being covered on the show, it was already trading sharply higher by more than $3 at the $62 area. Co-host Dennis Dick stated: “It is one tough stock [that] I have owned successfully and unsuccessfully over the years.”
He added: “I wished I had looked on Friday and would be up in it. It is value stock, which investors are hungry for, but I am not chasing it here.”
The author of this article alerted investors there were very few resistance levels above the premarket high of $62.58. Based on daily levels, the next target on the upside was its Oct. 11 high at $63.98.
WYNN Price Action: The issue found aggressive buyers of the much higher opening price ($61.69 vs. $58.30) and only retreated to $61.22 before continuing its move higher. As of 1:15 p.m. EST, it has exceeded the aforementioned daily high, reaching $65.32. It has backed off that high and is trading actively in the upper $64 handle.
It should be noted the rally is taking place on much higher than average volume as over triple the number of shares traded over Friday, with nearly two hours left in the session.
Photo: Unsplash
