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A man takes photographs outside the Wynn Macau casino resort, operated by Wynn Resorts Ltd.
Shares of high-end hotel operator Wynn Resorts fell more than 6 percent Wednesday after the company said gambling at their tables decreased in Macau.
Wynn said mass market operations, or walk-in business, from Wynn Macau fell 9 percent in the second quarter on a year-over-year basis. The weakness offsets the strong performance from Macau’s VIP operations, which saw a 35.3 percent year-over-year increase in table games turnover for the second quarter.
The decline in China’s gambling mecca also led investors to look past the company’s overall second-quarter results, which topped Wall Street’s expectations. Wynn reported adjusted earnings per share of $1.18 on revenue of $1.53 billion.
The company said the decline in its walk-in business was a factor of surrounding construction around the area, including that of a light rail. CEO Steve Wynn said the Wynn Palace, which opened last August in Macau, has been particularly affected by the construction and other “obstacles.”
“Mass has an awful lot to do with access,” Wynn said during a conference call. “We’re literally surrounded on four sides by things that are under construction that will all add to our mass.”
Wynn also said: “It’s very important that you don’t get caught up in the very short-term myopia that your professions demand in many respects.”
Stifel analyst Steven Wieczynski said in a note Wednesday that investors will take exception to the construction-related disruptions around Wynn Palace and their effect on mass gaming:
[T]hough the impact from construction-related disruptions in and around the Wynn Palace, and their dampening effect on the ramp of mass market gaming revenue growth, have been well documented, we do not expect the q/q decline in revenues, particularly within the mass gaming segment, to sit well with investors. To that end, we fully anticipate a reduction in property-level EBITDA consensus in both the current and outer years, as investors rethink the trajectory of the ramp at Palace.
Even after the drop, Wynn shares are up more than 50 percent in 2017.