I've been saying for awhile that Casinos (namely Vegas) were going to be trading down and impacted negatively in a big way ever since I went there in January and to Tahoe in February.
To me, the rooms were too expensive, the food was too expensive and the freebies/comps. were going down the toilet. I expect a certain level and what I got vs. prior years was same quality and MORE expenive due to high occupancy rates. Given that the consumer was stretched, that the economy was declining, I was cautious about Vegas.
Well, yesterday MGM announced they were unlikely to give performance bonuses due to weak results. Then today their rating got cut and the stock price got pummelled. At the same time, Kirk Kerkorian announced he was going to sell his Ford Stake at a HUGE multibillion loss yesterday. Jim Cramer seems to think it is a defensive move given the decline in MGM stock and Kirk's 50%+ stake in the company. If he needs to raise capital to complete the 4800 hotel room / 2800 condo/hotel room City Center Project he will need to inject capital of his own into the company to maintain that majority ownership.
As you can see from the stock charts neither have done well and, with things getting worse in the economy, I don't see things picking up anytime soon.
MPEL, for what it is worth, said they have enough cash on hand to finish the first two phases of their ENORMOUS project in Macau, City of Dreams. Their stock continues to languish. MPEL shares have bounced off their lows at $2.30 to close today at $4.15 (nearly a 100% bounce). I am still taking a "wait and see" attitude on MPEL as I don't see the stock price bouncing notably higher if MGM keeps on tanking.
Last week a major casino developer announced they were going to stop progress on a casino project in Vegas. Most of the steelwork is done but they still are delaying it by 6 months to a year due to funding concerns and overall concerns re: the economy and filling rooms, etc. When casinos aren't getting finished in Vegas you know things are tough!
Oh, and today Harrahs announced completion of the 6th tower at Caesars Palace and they are finishing up their convention center there as well. Caesars, from what I have been told, is the most expensive casino ($$$ spent developing/renovating) in all of Las Vegas. It is regarded as the PREMIER property in Vegas for Harrahs.