MGM Resorts helped to spark problems for gambling related shares when on Thursday it warned that reservations and room prices for the third quarter will be lower than was expected.
That guidance helped to send MGM shares down nearly 3% in early Thursday trading. MGM also posted second quarter earnings that were sharply lower. Penn National Gaming and Wynn Resorts were trading lower following the news by MGM.
CEO at MGM Jim Murren played down the significance of the drop in bookings calling the summer months a tough time for hotels in Vegas and he expects the end of this year to have a pickup in bookings.
During a conference call with analysts on Thursday Murren said analysts get worked up a great deal over just a few weeks. He asked the question if the analysts thought that anything structurally was taking place in Vegas, then he answered with an emphatic no, adding that if he shared that concern, he would tell them. He added that he expects MGM to be strong during the fourth quarter heading into 2019.
The drop in MGM followed a rollercoaster ride for casino shares Wednesday. Caesar’s Entertainment dropped by up to 24% on Wednesday and trade was stopped on several occasions after the casino resort operator reported weakness for the third quarter.
Caesars posted generally good results for its quarterly earnings, and said that it recovered from a huge loss in 2017 to post a narrow profit.
However, during a call midday on Wednesday with analysts CFO at Caesars Eric Hession said the company was seeing rate pressure for its rooms due to a weak period of bookings on the Vegas strip warning that per room revenue would remain flat during the third quarter. On that guidance other casino shares dropped as well.
CEO at Caesars Mark Frissora was forced to assure investors the company is expecting to return to a period of normal bookings before the end of 2018 and that it was keeping its guidance for the full year.
The CEO said that the company knows what bookings look like up to the end of 2018 and there is no concern over the company’s current forecast. He added that it was not like you look at one or two months and say that’s it for Las Vegas, as that is not the way it works.