WYNN

Casino Magnate Fertitta Pours $400M Into Plummeting Wynn Resorts ($WYNN), Signaling Strong Conviction in 'Undervalued Gem'

04/09/2025 07:47

Hotel and casino magnate Tilman Fertitta has made substantial share purchases totaling approximately $400 million in Wynn Resorts ($WYNN) over the past few weeks amid a sharp decline in the company's stock price. This move signals strong confidence in the future prospects of the company. In early April alone, Fertitta purchased 400,000 shares worth about $280 million within a week. Specifically, he bought 300,000 shares on April 4 and 100,000 shares on April 7, a strategic acquisition made when Wynn Resorts' stock had fallen below $70. Prior to this, he had purchased an additional 16,500 shares for approximately $1.4 million in late March. This massive purchase likely pushes Fertitta's stake in Wynn Resorts above 9.9%. Last November, Fertitta disclosed that he held a 9.9% stake, and this additional purchase has further increased his ownership. Fertitta holds this stake through Fertitta Entertainment, Inc. Tilman Fertitta, one of Forbes' 400 richest people, is a heavyweight in the hotel and casino industry, owning casino and restaurant chains such as Golden Nugget and Landry's. He also gained attention when he acquired the NBA's Houston Rockets for $2.2 billion in 2017. Fertitta's buying spree contrasts with Wynn Resorts' recent underwhelming performance. The company's fourth-quarter results, announced in February, reported adjusted earnings of $2.42 per share, significantly exceeding analyst expectations of $1.22. However, revenue decreased by 0.1% year-over-year to $1.84 billion. As the company approaches its first-quarter earnings announcement, the overall slump in the casino industry and uncertainties in the Macau business environment are putting pressure on the stock price. Wynn Resorts' stock price reached over $105 last October but has steadily declined since, falling to $66 on April 8. This represents a drop of approximately 37% from its 52-week high. However, there are positive factors for the company's long-term growth outlook. In October last year, Wynn Resorts secured the first commercial gaming operator's license in the UAE. This is considered a significant opportunity to diversify its business portfolio, which has been concentrated in Macau and Las Vegas. Wynn Resorts is currently developing a hotel-casino resort on Al Marjan Island in Ras Al Khaimah. Gambling revenue in Macau has also been showing signs of recovery. According to data released in March, Macau's February gambling revenue increased by 6.8% year-over-year to 19.7 billion patacas (approximately $2.46 billion). Since Wynn Resorts' Macau operations account for a substantial portion of the company's revenue, this recovery is interpreted as a positive signal. On the other hand, the Las Vegas business continues to struggle. In the last third-quarter results, Las Vegas revenue declined by 1.9% year-over-year to $607.17 million, with casino revenue plummeting by 13.6%. Additionally, the high debt level (debt-to-equity ratio of -1,088.3%) raises concerns about the company's financial health. Wall Street's assessment of Wynn Resorts is mixed. Jefferies upgraded Wynn Resorts to 'buy' in February, but some analysts maintain cautious positions due to concerns about China's economic instability and consumer spending contraction in the United States. Nevertheless, the majority of the 16 brokerages maintain 'buy' or 'strong buy' ratings, with a median price target of $113, suggesting significant upside potential from the current stock price. Fertitta's substantial purchase could serve as a positive signal to institutional investors. In particular, the fact that Fertitta, an industry insider, viewed the current stock decline as a buying opportunity demonstrates his conviction that Wynn Resorts' intrinsic value is higher than its current stock price. The upcoming first-quarter earnings announcement is expected to be a crucial event in determining the short-term direction of Wynn Resorts' stock price. The key points to watch will be the continued recovery of the Macau business, the potential rebound of the Las Vegas business, and the progress of the UAE project. Only time will tell whether Fertitta's massive purchase will be a signal for a future stock rebound or simply an individual investor's judgment.

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