Melco Resorts shares rebound, investors bullish despite second quarter net loss

Posted: July 28, 2021, 1:49 a.m.

Last update on: July 28, 2021, 02:33 am.

Shares of Melco Resorts have jumped more than 10 percent today. Investor enthusiasm comes less than 24 hours after the Macau integrated casino operator reported a net loss of $ 185.7 million in the second quarter.

Melco Resorts shares rebound, investors bullish despite second quarter net loss
Several Melco Resorts properties can be seen on the Cotai Strip, including City of Dreams, Morpheus, and Altira. Shares of the publicly traded Macau casino company soared during trading on July 28. (Image: Melco Resorts)

Melco’s US stocks are listed on the Nasdaq. The stock jumped $ 1.36 per share today to close at $ 14.91. For long-term holders of the casino company, Wednesday’s trading was very well received, as the stock fell nearly 17% in 2021.

From April to June, Melco’s operations in Macau, the Philippines and Cyprus generated sales of $ 566.4 million. While this was a nine percent increase quarter-over-quarter from the $ 520 million in the first quarter, revenue was not enough to offset expenses.

However, the outlook for Melco, some investors say, is bright. It’s a notion shared by Melco’s billionaire founder, CEO Lawrence Ho.

“We are delighted to see a gradual recovery in activity levels,” Ho told investors and game industry analysts. “We remain optimistic about our Macau market outlook, especially as Macau explores scenarios for more flexible travel with other cities in the Big Bay area. “

The other three US-based casino companies licensed in Macau didn’t see about the same increase in trading mid-week. Las Vegas Sands gained 2%, MGM Resorts 1% and Wynn Resorts 1.8%.

Melco mass motivation

Shares of Melco Resorts fell on Tuesday as the second quarter earnings report was released. Stocks lost almost four percent, but today they have more than regained those losses.

During the call, Melco and Ho revealed that customer focus at Altira Macau is changing. Altira is a casino complex located on the City of Dreams campus in Melco.

Formerly known as Crown Macau, the Altira has 216 rooms and a casino with 220 table games and 500 slot machines. Long focused on VIP activities, Ho said Cotai Strip ownership would pivot towards the so-called high-end mass market.

At Altira, we have embarked on a strategic shift that aligns Melco’s first integrated resort with the company’s broader focus on the high-margin, high-margin mass segment. Therefore, we have closed the VIP operations at Altira and moved both its existing direct and premium VIP activities to City of Dreams and Studio City, ”explained the boss of Melco.

Ho added that Altira’s old VIP gaming spaces will be reconfigured for the premium mass segment.

Melco’s kindness doesn’t pay off

In May, Melco Resorts launched its “Think About You” employee initiative. The program offered workers the option of time off. Although those who accepted Melco’s offer do not receive their full salary, they do receive a monthly affiliate.

For workers who retire for six to 12 months, they receive 40 percent of their full pay. For workers who take 13-18 months of leave, they receive 55% of their expected pay.

Sanford C. Bernstein gaming analysts said the program negatively impacted Melco’s second quarter bottom line. However, over the next few quarters, the brokerage says the initiative “will lead to a slight drop in compensation spending.”

Source link