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Wynn Macau Declines Are Worse Than Feared

Summary

Wynn did not go down the day after earnings, but fell significantly the day after.

Lurking behind an initial EPS beat are very distressing data points about Wynn's Macau operations, which are becoming less profitable and providing less hope for the future.

A look at Wynn and peers shows how the stock remains overpriced considering its significant declines.

Now that Wynn Resorts (NASDAQ:WYNN) has published detailed results of its first-quarter earnings, the initial slight uptick in the stock has reversed and the downward trend is continuing. The reason is clear: Macau is getting worse, despite sell-side assurances of a stabilization.

I Was Wrong... Until I Wasn't

Wynn bulls were not pleased with my assertion that Wynn would fall after reporting earnings, and I was surprised to receive only 1 comment that "the stock did not go down after earnings" after the company reported earnings after hours on May 5th.

And it's true-Wynn rose 1.77% from the close of May 5th to the close of May 6th, as investors initially consumed the news. (The S&P 500 was up 0.37% that day). Wynn's 8.5% year-over-year fall in revenues was in-line and the EPS was a huge 24 cent beat at $1.07, giving bulls a day to cheer.

A short-lived cheer for a short-term gain. Wynn was still down 4.5% from when I initially wrote my bearish piece on Wynn and anyone who shorted the stock based on my analysis made money whether holding...


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