Bally’s Stock Slumps as Atlantic City Prompts 2022 Estimate Cuts

Bally’s (NYSE:BALY) stock slumped Th after the regional cassino operator cut 2022 revenue and earnings before interest, taxes, wear and tear and amortization (EBITDA) estimates, citing weakness at its eponymic Atlantic City locale and strange currency headwinds.

The keep company is at present expecting 2022 Earnings Before Interest Taxes Depreciation and Amortization of $535 one thousand thousand to $550 million on sales of $2.2 one thousand million to $2.3 billion. That’s downwardly from a prior Earnings Before Interest Taxes Depreciation and Amortization calculate of $560 gazillion to $580 billion on revenue of $2.4 1000000000000 to $2.5 billion. Analysts were expecting sales of $2.38 billion.

Given commentary around the counselling cut, we anticipate the miss on margins reflects difficulties up profitability at Bally’s Atlantic City,” said Stifel analyst Jeffrey Stantial in a short letter to clients.

He rates Bally’s inventory a “buy” with a $29 price target. Then known as Twin Falls River Worldwide Holdings, Bally’s acquired the Atlantic City gambling casino inwards 2020 for the deeply discounted price of $25 jillion as Eldorado Resorts and the old variation of Caesars Entertainment throw properties in an effort to finish their merger.

The Atlantic City deal was component part of a broader three-casino dealing valued at $180 million. The other venues inward that packet are the Eldorado Shreveport Resort and Casino inwards LA and the MontBleu Resort Casino inward Lake Tahoe, Nevada.

International Results Hindered past Strong Dollar

While Bally’s is mostly known for its US casinos and North American iGaming and sports wagering businesses, the companion has international exposure past path of British online gaming truehearted Gamesys, which was acquired last twelvemonth for $2.7 1000000000000 inward the buyer’s biggest acquisition to date.

The Gamesys purchase is widely viewed as a potentiality long-term positive degree for Bally’s owing to matureness of the cyberspace gaming marketplace inwards the UK. However, it’s a near-term take exception because that unit’s profits and revenue are denominated inward British people pounds and must live converted into US dollars because Bally’s is an American company.

With the dollar ranking as the best-performing major currency this yr owing to multiple interest group hikes past the federal official Reserve, Gamesys earnings are beingness pinched.

“That said, the bulk of the revenue cut, and a portion of the adj. EBITDA cut, to full-year counseling appears to factor out FX headwind,” adds Stantial.

Bally’s Stock Also Pinched past Frederick North American Online Losses

Bally’s Frederick North American digital operations, which include the BallyBet app, may also be in arrears the stock’s Th slump.

“North America Interactive was inline, as BALY reported $17 million of losses on $18.1 one thousand thousand of sack revenues. This compares to our sculpturesque $16.2 one thousand thousand of losses and $17.5 gazillion of revenues. This implies BALY will want to meaningfully concentrate losses inwards the back-half of the yr to bang their FY point (-$60 million), though direction was vocal at Q1 that tech integration has proven the biggest cost – not marketing around crown sports seasonality (a trend demonstrated by peers),” notes Stantial.

That’s notable because rivals such as BetMGM and Caesars are meaningfully sliver losses and are flirting with profitability.