Wynn stock is currently trading at $96 per share, which is 31% below its pre-inflation shock high of $140 seen in March 2021. The stock was impacted by the collapse of Macau operations due to Covid-19 restrictions that hurt tourist inflows into the region. However, things have been looking up for Macau, with strong tourist arrivals and increased spending. Wynn is gaining market share in Macau, driven by the premium mass market and higher VIP rolling chip volumes.
Despite a decline of 15% from early January 2021 levels of $115 to $95 now, Wynn stock has had inconsistent returns over recent years. While it underperformed the S&P 500 in 2021 and 2023, it saw a 10% return in 2023. Beating the S&P 500 has been challenging for individual stocks, even for heavyweights in the Consumer Discretionary sector. The Trefis High Quality Portfolio, however, has consistently outperformed the benchmark index each year over the same period.
To reach its pre-shock high of $140 per share, Wynn stock would need to gain roughly 45%. While the stock may recover to those levels, its current valuation is around $105 per share, about 10% ahead of the market price. Concerns about the global economy and consumer spending may limit the stock’s upside in the near term. However, a detailed analysis of Wynn’s performance post-inflation shock indicates potential trends and compares them to the 2008 recession.
The inflation shock timeline from early 2020 to August 2023 shows the impact of various events on the economy, including rising inflation rates and interest rate hikes by the Fed. Wynn stock’s performance during the 2007/2008 crisis saw a significant decline but a strong rebound afterward. Despite a drop in revenues and losses in 2020-2022 due to the pandemic, Wynn’s revenues recovered in 2023, reaching around $6.5 billion with a net income of about $730 million.
With the Fed’s efforts to control inflation rates and stabilize the economy, Wynn stock has the potential for gains once fears of a recession subside. While uncertainties remain in the macroeconomic environment, analysis suggests that Wynn could see improvements in its stock performance. Overall, the recovery of Macau operations and increased tourist arrivals indicate positive trends for Wynn and the casino industry. Investors may want to keep an eye on how the stock performs in the coming months as market conditions evolve.
