The news broke on Wednesday that the legendary Steve Wynn, a Las Vegas mogul for over 50 years, and the founder and CEO of Wynn Resorts, Limited (NASDAQ:WYNN) had resigned. What does this mean for WYNN stock?
It was a no-win situation for Wynn. In any other climate, this news could have been handled from a crisis PR perspective. But in the days of #metoo, the PR backlash is just so bad that Wynn really didn’t have any choice. The board of directors has to explain to the world how it could keep Wynn at the helm given the allegations — and that’s what they are, allegations. But these days, allegations are taken as truth.
WYNN stock was up $15 on the day, more than 9%, because the market doesn’t like uncertainty. Once there was certainty, the updraft in stock price was like a wave of relief.
It’s an unfortunate situation all around. It’s difficult to determine the exact impact on WYNN stock over the long term, though.
WYNN Founder a True Vegas Visionary
What I do know is that WYNN stock has lost a true visionary. That’s what Steve Wynn is. He is not just a legend, but a man who intrinsically understands everything there is to know about gaming and resorts. For 50 years he held sway over the city of Las Vegas, starting from humble roots as a liquor salesman, and became friendly with the influential Frank Sinatra.
Wynn launched the current and ongoing wave of the mega-resort, which began when he opened The Mirage in 1989. I remember it being built, and remember how it astonished everyone when it opened. That vision carried over to every resort over the next 30 years — each one trying to outdo the next.
Wynn is a visionary on par with Steve Jobs of Apple Inc. (NASDAQ:AAPL) and Howard Schultz of Starbucks Corporation (NASDAQ:SBUX). Look what happened to those companies when the visionaries left their posts. That’s what I fear for Wynn Resorts.
Wynn Probably Won’t Vanish From WYNN
But that may be all it is: fear. It’s not as if Wynn, who owns about 21% of the company, will not have influence. I’m sure that behind the scenes, he will have plenty of contact with new CEO Matt Maddox, himself being elevated from the position of president. It may not mean that Wynn is involved in every detail, but it seems unlikely that he’ll just vanish.
More likely than not, he’ll return to the post in a couple of years after all of this has blown over. In the meantime, WYNN stock has been on an upswing with the Macau crackdown finally ending.
Bottom Line on WYNN
I’ve never seen Wynn Resorts stock as an investment vehicle. The company is more cyclical in nature, and I’ve found it better as a trading vehicle, or a stock to use options with. There are plenty of ways to generate profit in WYNN stock other than just going long and holding.
I have no doubt that Maddox will steer the company just fine going forward. And because I see WYNN stock more as a trading vehicle, a long-term growth trajectory doesn’t matter anyway.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. Meyers has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. He can be reached at [email protected].