The future for Las Vegas Sands

It has already been rumored that Las Vegas Sands is considering a sale. What form this might take is not known, and some speculate the company could divest themselves of key properties or seek a buyout, or even merger.

But no few are scratching their heads. What exactly is the company worth?

Las Vegas Sands earned nearly $6.8 billion in revenue from Macau in 2018. They are a large player in the dependent autonomous region, and are one of the few casino companies present in Singapore. Penetrating the Asian market has not been easy, but has clearly been profitable. Of course, the current U.S.-China trade war has taken its toll, squeezing their stock price for the interim.

Some are suggesting that Las Vegas Sands is worth $64 per share. This is a sharp drop from the high eighties that it has enjoyed.

Long term earnings estimates for Las Vegas Sands are actually quite good, meaning whatever difficulties and shortfalls they are facing are not likely to continue. So why the price drop?

In short, it is a lack of confidence.

Economic data is mixed. Some signs point to lowered rolling chip volume, while others hint at continued market growth. Yet VIP highrollers have dropped off, and certain visitor metrics are disappointing.

Ultimately, gambling is a cyclical industry. Often it defies the economy, booming in depressions, and shrinking in rallies. It is tied heavily with the psychology of players, and that has waned.

It is not the first time, and won’t be the last. These market lulls are always temporary, and the industry knows how to treat them. Las Vegas is launching a number of new attractions, betting big on sports and virtual reality. People are fickle, and grow bored of entertainment. But new experiences will ignite new confidence, and bring in tourist and gambling dollars.

But as far as Las Vegas Sands is concerned, now might not be the time to sell.