Wynn stock is currently trading at $91 per share, down about 35% from the pre-inflation high of $140 seen on March 17, 2021. The stock has been affected by Macau operations, which has seen a massive decline in trading in 2021 and 2022. China’s stringent COVID-19 restrictions have hurt tourist inflows to the region. The stock traded as low as around $52 in June 2022 and has jumped nearly 74% from these levels to currently stand at around $91. Things have settled down in Macau recently as China eased travel restrictions And there has been an increase in demand for gaming activities which is leading to the recovery. , For perspective, the company’s operating revenue for Q2 increased 49% to $1.60 billion, with Wynn reporting net income of $105.2 million, compared to a net loss of $130.1 million a year earlier.
Interestingly, Wynn stock’s Sharpe ratio has been 0.1 Since the beginning of 2017, less than 0.6 for the S&P 500 index over the same period. It is compared to Sharp of 1.3 For Trefis Reinforced Value Portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
Returning to pre-inflation shock levels means Wynn stock would gain about 54% if the stock rises from its current pre-shock high of $140 per share to $140 per share, up from $91 currently. While it’s possible the stock may return to those levels, our current estimate is Wynn’s evaluation About $109 per share, just ahead of the current market price. While we believe Wynn could see profits, we believe the company’s upside in the near term may be limited due to concerns about the global economy and a potential slowdown in consumer spending. Our detailed analysis of Wynn Upside Post-Inflation Shock This reflects trends in the company’s stock during the turbulent market conditions seen in 2022. It compares these trends to the stock’s performance during the 2008 recession.
2022 inflation shock
Timeline of inflation shocks so far:
- 2020 – early 2021: Increase in money supply to mitigate the impact of lockdowns led to higher demand for goods; Manufacturers were unable to keep up.
- Early 2021: Shipping disruptions and labor shortages due to the coronavirus pandemic are impacting supplies
- April 2021: Inflation rate crosses 4% and increases rapidly
- Early 2022: Energy and food prices rise due to Russian invasion of Ukraine. Fed begins its rate hike process
- June 2022: Inflation levels reach 9% – the highest level in 40 years. The S&P 500 index fell more than 20% from the high.
- July-September 2022: The Fed raises interest rates aggressively – resulting in an initial correction in the S&P 500 followed by another sharp decline.
- From October 2022: Fed continues rate hike process; Improving market sentiment helped the S&P500 recoup some of its losses.
By contrast, here’s how WYNN stock and the broader market performed during the 2007/2008 crisis.
Timeline of the 2007–08 crisis
- 10/1/2007: Estimated pre-crisis peak in the S&P 500 index
- 9/1/2008 – 10/1/2008: Market decline accelerates in line with Lehman bankruptcy filing (9/15/08)
- 3/1/2009: Estimated bottom of the S&P 500 index
- 12/31/2009: Initial recovery to levels before rapid decline (circa 9/1/2008)
Wynn Stock and S&P 500 Performance During the 2007-08 Crisis
WYNN’s stock dropped from approximately $164 in October 2007 to $21 in March 2009 (as the market was bottoming), meaning the stock lost more than 85% of its value due to the decline. However, the stock rebounded strongly in early 2010, rising nearly 178% to more than $58. The S&P 500 index saw a 51% decline, falling from a high of 1,540 in September 2007 to 757 in March 2009. After this, between March 2009 and January 2010, it increased by 48% to 1,124.
Wynn’s basics in recent years
Wynn’s revenue declined from approximately $6.6 billion in 2019 to approximately $2.10 billion in 2020 as the spread of COVID-19 impacted gaming and hospitality-related revenues. That number rose to $3.8 billion in 2021 and $3.75 billion in 2022, as the recovery in the US was partially offset by weakness in Macau. While the company made a profit of more than $300 million in 2019, it has been loss-making for the past three years as the pandemic impacted its business. The net loss in 2022 was approximately $700 million.
With the Fed’s efforts to control rapidly rising inflation rates helping market sentiment, Wynn stock is likely to gain as fears of a potential recession fade away.
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