Tropicana Las Vegas and Bally’s Announces Job Cuts Amid Stock Loss
Posted on: November 1, 2023, 04:30h.
Last updated on: November 1, 2023, 04:30h.
In light of Bally’s third-quarter earnings report, which resulted in a 14.80% loss in the stock today, the company has announced plans to reduce its workforce by 300 employees. Additionally, executives expressed openness to selling the lease on the Tropicana Las Vegas casino hotel if the price is right.
The decision to cut jobs follows Bally’s previous announcement in January that it would reduce headcount in its interactive division by up to 15% to curb costs. These cost-cutting measures, along with the disappointing earnings report, contributed to the stock’s decline. Bally’s reported a loss of $1.15 per share on revenue of $632.5 million for the September quarter, missing analysts’ expectations of a 15-cent loss on sales of $634.54 million.
The updated revenue and earnings guidance for 2023 also negatively impacted the stock price.
Bally’s is adjusting the revenue guidance provided on May 9, 2023, for the remainder of the year to $2.4 billion to $2.5 billion. The guidance range for Adjusted EBITDAR is now $640 million to $655 million,” according to a statement.
The company cited several factors, including delays in launching its temporary casino in Chicago, for the revised outlook.
Tropicana Las Vegas Awaits MLB Decision
Bally’s only property in Las Vegas, Tropicana Las Vegas, is currently in limbo as the operator and real estate owner Gaming and Leisure Properties await the outcome of a Major League Baseball owners meeting. At the meeting, approval is expected for the Oakland Athletics to relocate to Las Vegas, which would involve building a new stadium at the Tropicana site. Uncertainty surrounding Tropicana’s future has had a negative impact on the venue’s performance in the third quarter.
During a conference call with analysts, Bally’s executives stated that Tropicana’s value is substantial and that the company would consider selling its lease at the right price. Bally’s acquired the lease rights for $150 million, and Chairman Soo Kim mentioned that Tropicana’s asset value has increased.
“Although we have some short-term pain, this is an extremely valuable asset,” said CEO Robeson Reeves to analysts.
Challenges Faced by Bally’s in Q3 Results
In addition to the issues with Tropicana and the delayed opening of the temporary casino in Chicago, Bally’s faced challenges at its venues on the Atlantic City Boardwalk and in Evansville, Indiana. The operator did not provide specific details about the Atlantic City problems, but executives noted that the regional casino in Evansville was affected by the introduction of more historical horse racing machines in neighboring Kentucky.
“We sense investors may have expected sequential improvement as BALY transitions to a variable-cost tech strategy,” wrote Stifel analyst Jeffrey Stantial in a note. “FY23 guidance was revised lower on Chicago timing & curtailing of Tropicana operations ahead of a potential A’s relocation, with implied Q4E Adj. EBITDAR ~$20M below Consensus at midpoint. Overall, we see more negatives than positives in BALY’s Q3 results, though the bar felt low heading into earnings.”
Stantial rates Bally’s as a “hold” with a $10 price target.