Casino stocks are down! How inflation and economic fears are taking a toll
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Gambling stocks have fallen off a cliff in the past year, as inflation makes people more prone to sell their assets for liquidity.
What’s the best course of action in a crisis like this? Learn from our in-depth 2022 casino stocks guide!
What Major Casino Stocks Are Affected by Inflation?
| Gambling stocks | Stock indicator | Price Q1 | Price Q2 |
|---|---|---|---|
| Caesars Entertainment | NASDAQ: CZR | $86 | $39.65 |
| Bally’s | BALY: NYSE | $36.25 | $18.61 |
| Penn National Gaming | NASDAQ: PENN | $50.82 | $27.4 |
| MGM Resorts | MGM: NYSE | $43.73 | $27.95 |
| Golden Entertainment | NASDAQ: GDEN | $54.85 | $41.3 |
| Red Rock Resorts | NASDAQ: RRR | $50.28 | $33.05 |
| Hilton Grand Vacations | HGV: NYSE | $51.86 | $43.5 |
Disclaimer
We hold an advantageous long position in MO shares via stock ownership, options, or other derivatives. This article was written based on our research, and it contains our own opinions. We receive no compensation from any of the presented companies. In addition, we have no business ties to any of the companies whose stock is mentioned in this article.
Why are Casino Stock Prices Falling?
Casino stocks have underperformed mainly due to the current inflation and fears of a global recession. Naturally, in such a tense economic atmosphere, people tend to spend less at the casino table and ponder more about the unknown future.
The gambling sector is susceptible to periods of social and economic turmoil.
Definition
Gambling companies are said to be part of the consumer discretionary sector, as they ‘trade’ entertainment, a nonessential service.
Prices for consumer discretionary stocks will drop during tough times but most likely return to the expected values when all is well again economically.
Where to Find Accurate Financial Info
| Forecast service | Reliability rating | Best feature | Drawbacks |
|---|---|---|---|
| Nasdaq | 5/5 | Real-time updates | Not all companies are NASDAQ-listed |
| Wall Street Journal | 5/5 | In-depth analysis by renowned experts | Too complex for beginner traders |
| Financial Times | 5/5 | Unbiased, detailed reports | You have to be an expert to read some of their content |
| Bloomberg | 5/5 | Fast, accurate delivery of market info from 1500+ sources | Costly for the average user |
| London Stock Exchange | 5/5 | Real-time updates | Not all companies are LSE-listed |
| Tipranks | 5/5 | Advanced data-driven research tools | High price for full membership |
| Yahoo Finance | 4/5 | Unlimited watchlists | Old-school website |
| Marketwatch | 4/5 | Virtual stock exchange simulator | Some features are only for subscribers |
| Simply Wall St | 4/5 | Optimized design with graphs and tables, 7-day premium trial | You may not find the company you need to know about |
| Motley Fool | 4/5 | Great stock picks for new traders | Expensive to get access to all the features |
| Gov Capital | 4/5 | AI-driven forecast features, $1 trial | Too many ads if you’re not registered |
| CNN Money | 3/5 | Intuitive forecast display | Not entirely accurate |
Know that you don’t know
No matter how many forecast services you will turn to, you should keep in mind that market movements are dictated mainly by social hype.
A reason behind stocks’ volatility can be the volatile public response itself. Look at Tesla’s stock price fluctuation during the past 2 years. You’ll see abrupt price changes that often correlate with outrageous news featuring Elon Musk.
Past stock prices in currencies other than the USD were converted to today’s exchange rates.
Disclaimer
We’re not affiliated with any financial forecast services we link throughout this article. Stock prices in our tables reflect the situation at the time of writing, as posted on these websites.
Be aware that prices are subject to market fluctuations.
Gambling Stock Prices Projection for the Next 12 Months
| Price target at | CZR | BALY | PENN | MGM | GDEN | RRR | HGV |
|---|---|---|---|---|---|---|---|
| Yahoo Finance | $106.43 | $43.43 | $54.16 | $53.52 | $66 | $53.33 | $71.75 |
| Nasdaq | $108.36 | $40.67 | $52.43 | $50.25 | $62.5 | $55.83 | $69.5 |
| Tipranks | $108.36 | $40.67 | $52.43 | $50.25 | $62.5 | $55.83 | $74 |
| Wall Street Journal | $103.27 | $41 | $56.56 | $53.48 | $66.33 | $54 | $71.75 |
| Marketwatch | $105 | $38 | $56 | $52.5 | $67.5 | $54.5 | $69.5 |
We didn’t include all the consulted forecast services in this table because they offer similar price targets.
Our table shows the average price targets for 7 major gambling companies primarily operating land-based venues, hotels and resorts.
You shouldn’t take these as absolute values. The actual price in 2023 might go either way.
Online Gambling Companies Stock Prices for 2022
| Company | Stock Indicator | Price Q1 | Price Q2 |
|---|---|---|---|
| 888 Holdings PLC | 888.L | $2.28 | $2.19 |
| Flutter Entertainment PLC | PDYPY/LSE:FLTR | $57.40 | $51.58 |
| DraftKings Inc. | DKNG | $23.52 | $11.42 |
| Aspire Global PLC | ASPIRE.ST | $108.6 | $86.3 |
| Entain PLC | ENT.L | $1.6 | $1.46 |
| Evolution Gaming Group AB | EVO.ST | $109.01 | $91.09 |
| Playtech PLC | PTEC.L | $7.3 | $6.77 |
| International Game Technology PLC | NYSE:IGT | $28.45 | $18.77 |
How did online gambling companies fare in 2022?
- We can see that online gambling operators were also affected by this year’s events
- However, online gambling companies seem to have performed better, so their stock price dropped at a slower rate compared to offline operators
- In our view, this is due to the sensibly higher cost of a land-casino visit
- You’d need more cash for a trip to an MGM resort than for a session at one of the top online casinos UK
- That’s why 2020 was a horrible year for casino resort operators, while online gambling companies didn’t suffer that much
Suppose we collate this data with our internal performance audits. In that case, we can single out 888 Holdings and Entain as our top recommendations. The two companies launch new casino sites constantly, and the casinos are competitive enough to survive and thrive in the market.
Online Gambling Stocks’ Price Targets for 2023
- 888 – $5.88
- FLTR – $177.75
- DKNG – $27.72
- ASPIRE – N/A
- ENT – $22.61
- EVO – $159.78
- PTEC – $8.34
- IGT – $35.21
We took the price targets from the Wall Street Journal magazine. Be aware that prices fluctuate and might look different when you read this article.
Fact Check: The Gambling Stock Market Hit Rock Bottom
- Gambling stock prices have reached unprecedented lows this quarter
- Prices are dropping as inflation wreaks havoc on the global economy
- Both online and offline operators suffer significant losses since money is worth less
- All signs seem to point toward the market hitting rock bottom
- Two opposing but equally wrong views stem from this situation
- Some believe the sharp decline means gambling stocks are down for good and therefore decide to sell
- Others see it as a God-sent opportunity to buy at a low price and profit later
Online and offline gambling companies are affected differently
It might be a good idea to account for these differences if you’re an investor. Assessing your properties’ volatility is the best way to navigate these uncertain times.
What’s the three-day rule in stocks?
The three-day rule states that, following a significant shift in price, an investor should wait at least 3 days before buying.
Gambling + Stocks + Inflation = A Tricky Combination
The events of 2020 marked a decisive shift in the casino industry’s revenue influx. Now, an equally transformative context seems to have emerged: inflation.
Naturally, stock prices decrease during such periods, but not all companies will perform the same.
Inflation correlates with a rise in production costs and an increased price for the end products or services.
When demand exceeds the offer, customers will be willing to pay more for the same thing. Rising interest rates can lead to a market crash, even more so when they combine with tense political factors.
Land-based gambling stocks performance in 2020
- The top 4 land-focused casino stocks had to suffer some losses during the first two quarters of 2020
- Penn National Gaming effectively navigated the crisis, suffering minimal losses
- Despite MGM’s graph line looking relatively steady, the company’s earnings reached an all-time low when land-based casinos were forced to close
- The situation stabilized as emergency regulations were loosened, and all companies registered exponential growth toward the end of the year
Suppose you acquire an asset at a lower price. In that case, your capital is at risk because you don’t know when the prices will go up. Make sure you can handle some losses at the beginning.
Forecast for the top land-casino stocks
- PENN is still held high by financial experts, who regard it as undervalued
- The same goes for BALY stocks, for which Wall Street experts share a strong consensus
- CZR share price went off a cliff during this quarter but looks likely to make a return in the coming months
- The owner of the prestigious Bellagio, MGM Grand and multiple other operations in Macau will expand in the later 2020s
- That means the MGM stock price will go up, a fact further proven by MGM’s deals in Dubai and Japan. MGM also looks to grow in the online realm with its sports betting app
- Overall, gambling companies’ revenues and, therefore, share prices will stabilize during the later part of 2022 and 2023
Suppose you’re going to invest in MGM stocks. In that case, Wall Street analysts advise you to wait until the company has returned to profitability.
Best performing online gambling companies in 2020
As the graph shows, Flutter Entertainment (LSE: FLTR) was the least affected online gambling company during the 2020 crisis. The company has enjoyed smooth sailing with its best-performing UK slots sites, including Paddy Power and Betfair.
- In Q3 2020, IGT stock prices dropped, but that’s not surprising. The company is specialized in casino software solutions, and during that time, they probably didn’t have so many new casinos to sell their software to
- Entain and Draftkings stocks were relatively stable throughout the year
- A combination of stimulus money, the temporary closing of land-based casinos and other socio-economic measures kept the online gambling industry afloat
- The notable differences in share value cannot be attributed to financial performance alone
- For instance, Flutter Entertainment’s high stock price may be related to its proportionately high revenues
- Nonetheless, despite these differences, we can notice an upward trend
- So, it’s safe to say that the 2020 crisis didn’t have such a dramatic impact on iGaming companies
What does it mean to sell the rip?
Selling the rip is when investors decide to sell an asset that has declined sharply. It can help cut losses when stocks are underperforming.
Sometimes a stock’s abrupt decline is followed by explosive growth. It’s vital to base your investment decisions on real-world research and not on crunching numbers alone.
Forecasted price targets for online gambling stocks
- Inflation led to a depreciation of gambling stocks in Q2 of 2022
- FLTR and ENT shares also dropped due to upcoming UK gambling regulations
- But it’s not a paradox that most analysts bet on the stocks rising again next year
Gambling during the inflation
It’s a fact that inflation correlates with less spending on entertainment. Still, in times of economic restraint, people may see gambling not as entertainment but as a way to make money.
Our responsible gambling principles strongly advise against this. However, we’re aware such player attitudes can bring significant revenue, preventing the industry’s absolute crash.
Casino Stocks Take a Hit, but the Market Won’t Crash
It’s important to remember that no crisis lasts forever. The market is cyclical, so you have reasons to trust that entertainment stocks, particularly gambling stocks, will not crash indefinitely.
Look back in history to navigate a stock market crash. Investors should look at the recent financial crises of 2001, 2008 and 2020 to understand how to proceed now.
To prepare for a market crash you need to
- Diversify your asset portfolio and balance gambling stock with other types of assets
- Be ready to buy when prices drop, and
- Have a long-term plan instead of panic selling when things don’t go your way
Are casino stock prices down for good?
Once the global economy returns to normal, gambling share prices should reach pre-2022 levels as well. After each significant crisis, the market tends to stabilize. The question now becomes how long will the current inflation last.
Technically, if the patterns of the previous crises remain, you could recover much of your losses in less than one year. Therefore, panic selling is most inadvisable.
Should you buy the dip?
When prices reach unprecedented lows, buying is generally a good idea. Still, there’s no way for an investor to determine the perfect time to try and beat the market.
Undervalued Gambling Stocks List
| Undervalued stocks | Current Price | Buy rating | Forecast by |
|---|---|---|---|
| Penn National Gaming | $28.21 | Strong Buy | Wall Street Journal |
| Bally’s Corp | $18.01 | Moderate Buy | Tipranks |
| IGT | $18.48 | Strong Buy | Tipranks |
| Flutter Entertainment | $110 | Moderate Buy | Yahoo! Finance |
| 888 Holdings | $2.09 | Strong Buy | Simply Wall St |
What are undervalued stocks?
A stock is deemed undervalued when its listed price is perceived to be erroneous. Undervalued stocks are listed at a much lower price than the market, creating a value-bet-type opportunity.
That’s why undervalued stocks hold the highest potential for investors who are patient enough to wait for long-term bargains.
Why Casino Stocks’ Low Price Can Be A Blessing in Disguise
- You shouldn’t rush into buying casino stocks just because the price seems too good
- Cheaper stocks are affordable, but it’s not only the price that dictates profitability
- A low-priced casino stock is only valuable if the price/earnings per share (PE) ratio is low
- In other words, you want to pay less but for an asset that can potentially yield more
- With lower PE stocks, you can earn more over longer periods
- Make sure you always back up your investment decisions with a real questioning of the market average
- Look at other metrics that show the company’s profitability, for instance, sales, revenues, net worth and earnings per share
Best Casino Stocks to Buy in 2022
| Gambling Company | Stock Indicator | Current Price | Price/Earnings Ratio | Predicted Growth | Volatility |
|---|---|---|---|---|---|
| 888 Holdings | LSE:888 | $1.94 | 14x | 4.7% | High |
| IGT | NYSE:IGT | $19.01 | 8.2x | 39.8% | Average |
| Penn National Gaming | NASDAQ:PENN | $28.51 | 12.44x | 41.9% | Average |
| Flutter Entertainment | PDYPY | $103.38 | 247.7x | 15% | Low |
Why invest in these stocks?
Despite the high volatility, we believe 888 Holdings shares are a good option. Since the price is so low, you could technically turn volatility into an advantage if stock value spikes up in the future.
If you want to play it the safest, you should opt for stocks in Flutter Entertainment. They are pricey but have registered the slightest fluctuations during the past two years.
What stock do you think is best?
Tell us your opinion by leaving a comment in the section below.
