Wynn Resorts, Limited (WYNN) — This casino and gaming resort operator in Las Vegas and Macau has fallen on hard times. This is primarily due to actions taken by the Chinese government to crack down on corruption, which have cut drastically into the VIP segment of its market.
S&P Capital IQ Equity Research expects revenue to fall 20% in 2015, while earnings are forecasted to fall 56% to $3.30 per share.
Overall gaming revenue in Macau has fallen for 16 consecutive months on a year-over-year basis. While October held promise thanks to China’s Golden Week holiday, which runs from Oct. 1-7, the country was struck with Typhoon Mujigae — the worst storm to hit the Chinese mainland in October since 1949. Visitation in Macau is down 16% since the storm made landfall on Oct. 4.
The chart below is a model of a dramatic bear market decline. From its high near $250 in March 2014, WYNN stock fell to a closing low of $51.71 on Oct. 1. A recovery to its 50-day moving average was reversed on Wednesday when news of the typhoon’s impact on the Macau economy was released. MACD is now overbought and the next support is at its bearish support line at $60.
Sell WYNN stock short at $71 or higher with a trading target of $55 for a potential gain of more than 22%. A stop-loss order should be entered at $78.
Short sellers should check with their broker for any unusual restrictions on shorting this or any other stock. They should also be aware that if they hold shares short through an ex-dividend date, they will be required to pay the dividend to the owner of the stock.
