Wynn Resorts (NASDAQ:WYNN) stock is up by more than 10% today after Houston Rockets owner and billionaire Tilman Fertitta disclosed a 6.1% passive stake in WYNN stock — equivalent to 6.91 million shares — through a 13G filing. A passive stake means that the shareholder will not be actively involved with company decisions. Still, investors are speculating that the initial stake may be a prelude to an eventual acquisition.
The “World’s Richest Restaurateur” is no stranger to the hospitality and gambling industry. Previously, Fertitta owned Golden Nugget Las Vegas casino and currently owns companies like Golden Nugget Hotel & Casinos, Bubba Gump Shrimp Company and Del Frisco’s through his holding company, Fertitta Entertainment.
Shares of WYNN stock are down more than 25% year-to-date (YTD), driven by stringent Covid-19 policies in China. The company derives much of its annual revenue from Macau, which is a special administrative region (SAR) of China. During the second quarter, Wynn reported operating revenue of $908.8 million, down by $81.3 million year-over-year (YOY).
WYNN Stock: Tilman Fertitta Discloses 6.1% Stake
Wynn Macau only brought in operating revenue of $58.6 million during Q2, down from $184 million a year ago. The company attributed the decrease to “certain travel-related restrictions and conditions, including COVID-19 testing and other mitigation procedures, related to the COVID-19 pandemic.”
Meanwhile, company operations from Las Vegas and Encore Boston Harbor fared much better. Las Vegas contributed $561.1 million of operating revenue, up by $206 million YOY. Encore Boston Harbor contributed $210.2 million of operating revenue as well, up by $44.9 million YOY.
That said, Wynn is a company that is heavily fueled by debt. As of Q2, total current and long-term debt outstanding tallied in at $11.91 billion, compared to cash and cash equivalents of $2.01 billion. More specifically, $5.97 billion of the debt is related to Macau operations while $3.13 billion is related to Las Vegas operations. The company’s borrowing capacity totals $1.04 billion through revolving lines of credit.
Investors leaning on Fertitta to clean up the company’s balance sheet will have to wait longer due to his passive stake. Make no mistake, Fertitta certainly has the prowess to invoke major changes, should he amend his position to active. In 2004, the entrepreneur was elected to the Texas Business Hall of Fame. He was also the second-youngest Texan to do so, just trailing behind Dell Technologies (NYSE:DELL) founder Michael Dell.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
