Las Vegas (LVS) Sands might have its eye on expansion into Texas, but it appears to be ready to dedicate a lot more time to its casinos in Asia. The casino operator is expected to come into a serious amount of cash soon and isn’t quite sure what to do with it. According to a recent earnings call, much of it might be spent supporting its operations in Macau and Singapore.
A Shift in Global Gaming
Las Vegas, for decades, was the epicenter of the global gaming space; the destination most gamblers wanted to visit. However, even prior to the COVID-19 pandemic, some believed the city had lost some of its luster and predicted that a shift was coming. According to a report by Casino.org, LVS, which is selling the Venetian and the Sands Expo and Convention Center to Apollo Global Management and VICI Properties for $6.25 billion, might catapult that shift forward, indicating that it could consider boosting its Sands China stake from 69.94% to 75%, the highest allowed under regional policies.
Sands China is just one option the company is considering, but rumors of a greater amount of resources being spent on Asian operations have surfaced before. LVS CFO Patrick Dumont asserted during the earnings call, “So [Asia is] definitely something that we think about and consider over time. I think where we are now – we don’t have the proceeds yet. We’re looking at all the options, and we’re going to consider everything.”
Versatility Key to Future Success
LVS has primarily operated in Las Vegas and Macau for years, but is now looking outside Sin City. It is eyeing New York and Texas, with the Lone Star State an untapped resource for the casino industry. The company has already started to spend money campaigning for gambling expansion there, but is open to adapt to wherever the market takes it. What the company hasn’t discussed recently, but did mention earlier this year, is an entry into online gaming. LVS founder and chairman Sheldon Adelson was vehemently opposed to online gaming before his passing this past January, but the new brass seems to be more willing to embrace the idea.
Until a clearer picture emerges of what projects LVS has planned, industry analysts are keeping the company at arm’s length. It saw its highest recent stock price on March 15 when it reached $66.20, but it has since fallen, closing at $58.33 yesterday afternoon. That’s still way off from where it was two years ago and a complete freefall from its all-time high of $138.25 from October, 2007.
As a result, analysts are more than a little cautious about what’s next. Steven Wieczynski, the managing director at Stifel Financial Corp, explains, “Our frustration level continues to be high, given LVS’ massive underperformance versus our coverage universe and the broader equity markets as well. We aren’t throwing in the towel and at this point are actually more positive about the setup in the shares moving forward than we probably have been over the last six months.” Wieczynski did give LVS a slight boost, though, listing its stock as a “buy.”