Encore earnings drop 60 percent

FEBRUARY 5: Signage at the entrance to the Encore Boston Harbor resort. (Photo by Jim Mahoney)

Despite brutal 2020 numbers analysts remain bullish on strong future

By JOSH RESNEK

About two weeks ago, Apple Corporation reported incredible earnings. The company beat Wall Street expectations for the quarter. The company didn’t just beat them, the company blew them out.

The next day, Apple stock sank about $4.00 a share and has remained somewhat dizzy and unmoving since.

Try to explain this?

Call if the fickleness of Wall Street and of the peregrinations of the stock market.

Sometimes what should go up goes down. Other times what should go down goes the other way.

Last week, Wynn Resorts, the owner of Encore, reported the worst quarter in the company’s history.

Revenues were down by 60%.

What happened with Wynn Resorts stock?

It trended upward by 10% last Friday to $115 a share. A stock rising in the face of such terrible earnings figures implies that gaming is one of the darlings of Wall Street.

Why?

Because of Wynn/Encore’s proven ability to make money, to attract hundreds of thousands of gamblers to its casinos and hotels.

Conventions used to be one of the great revenue producers.

Right now, that end of the business is dead in the water.

According to several Encore employees who talked about the reopening of the hotel on a part-time basis last week, about 80-90 of the nearly 400 rooms were occupied with guests.

All night gambling is again going on at the Encore, which is proving to be another boost in income for the struggling casino.

Mind you, the casino is struggling not because of itself.

Rather, the restrictions against large gatherings are the single most detrimental impact on earnings and gross revenues.

With Boston, tourism and visitation down by 70%, the likelihood of a packed casino and hotel is right now an impossibility.

There are also serious rumblings in Wynn’s Chinese operations in Macau.

It is anyone’s guess when and if tourism will return to its Macau operations, and whether or not the Chinese government will renew their licenses to operate.

Business in Macau produces 75% of Wynn’s yearly income.

That marketplace, only 35 miles from Hong Kong, has been hit dramatically by the virus and its effects.

Income in 2020 was down 75% for Wynn’s properties there.

When the virus is under control, and the new normal takes effect, the casino and hotel in Everett will report much larger earnings and revenues. Many hundreds of employees will be hired back.

Financial analysts following casino resorts all indicate a great deal of belief in Wynn’s ability to weather the storm and to get back to a place where the bleeding has stopped, and profits begin piling up again.

However, the belief, in general, is that this might not occur until 2024-2027.

Casino and hotel complexes are in the business for the long-term.

The short term right now is a disaster.

The long term outlook…most financial analysts still believe strongly in casinos and their hotels and their ability to attract families to wholesome tourism venues.

Time will tell.

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