With Optimism About A Macau Recovery, Is Wynn Stock A Buy?

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WYNN: Wynn Resorts logo
WYNN
Wynn Resorts

Wynn (NASDAQ:WYNN) stock has declined by roughly 5% over the past month (about 21 trading days) compared to the S&P 500 which remains down by 11% over the same period. While the broader markets have been hurt by the Fed’s continued rate hikes and concerns of a U.S. recession, Wynn has been a relative outperformer as investors increasingly bet that the company’s Macau business could pick up as Covid-19 restrictions are eased. Wynn’s Macau operations accounted for roughly 70% of the company’s 2019 pre-pandemic revenue, and this number fell to a mere 13% of total revenue over the most recent quarter, amid travel restrictions and China’s stringent zero-Covid policy, which led to a drastic decline in tourist inflows into the region.  However, things could finally start looking up. Last week, there were reports that China is supporting Hong Kong’s plan to ease Covid restrictions and this is making investors hopeful that Macau, another special administrative region like Hong Kong, could also see a recovery.

Given that WYNN stock is down 5% over the last month, will it continue its downward trajectory, or is a recovery imminent? Going by historical performance, there is a roughly 55% chance of a rise in WYNN stock over the next monthOut of 816 instances in the last ten years that WYNN stock saw a twenty-one-day decline of 5% or more, 449 of them resulted in WYNN stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 449 out of 816, or a 55% chance of a rise in WYNN  stock over the coming month. See our analysis on Wynn Stock Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using the last ten years’ data

  • After moving -9% or more over a five-day period, the stock rose in the next five days on 51% of the occasions.
  • After moving -5% or more over a ten-day period, the stock rose in the next ten days on 55% of the occasions.
  • After moving -5% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 55% of the occasions.
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This pattern suggests that there is not a very strong chance of a rise in WYNN stock in the near term.

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 Returns Sep 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 WYNN Return -2% -30% -31%
 S&P 500 Return -7% -23% 65%
 Trefis Multi-Strategy Portfolio -11% -25% 198%

[1] Month-to-date and year-to-date as of 9/25/2022
[2] Cumulative total returns since the end of 2016

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