What Happened?
Shares of luxury hotels and casino operator Wynn Resorts (NASDAQ: WYNN) fell 7.8% in the morning session after China imposed a 34% tariff on all U.S. imports amid escalating trade war tensions. This was partly in response to the "reciprocal tariffs" announced by the Trump administration the previous day, with levies on Chinese goods estimated to be as high as 50%.
The announcement added a new layer of uncertainty for the company, which remained heavily exposed to the Chinese market through its operations in Macau.
While the tariffs may not directly affect the hospitality and gaming sectors, they signal a broader deterioration in U.S.–China relations, an environment that could negatively impact regulatory conditions, consumer sentiment, and travel flows. With a significant portion of Wynn's revenue generated from Chinese high-end gamblers and tourists, heightened geopolitical friction raises the risk of reduced visitation and spending.
The shares closed the day at $70.04, down 3.9% from previous close.
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What The Market Is Telling Us
Wynn Resorts’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock gained 10.7% on the news that the company reported strong fourth-quarter 2024 results that blew past analysts' EPS and revenue estimates. However, Casino revenue came in below expectations, with weakness in Wynn Macau offsetting gains in Wynn Palace and Las Vegas. Adjusted property EBITDAR declined slightly as softer results in Macau and Encore Boston Harbor weighed on overall profitability.
Looking ahead, the company reiterated its growth focus, including its Wynn Al Marjan Island development in the UAE, which is expected to enhance long-term cash flow. Overall, we think this was still a solid quarter with some key areas of upside.
Wynn Resorts is down 16.3% since the beginning of the year, and at $70.18 per share, it is trading 34.7% below its 52-week high of $107.46 from April 2024. Investors who bought $1,000 worth of Wynn Resorts’s shares 5 years ago would now be looking at an investment worth $1,237.
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