Vidi, Vici: Caesars Stock Rising Despite Q1 2021 Loss After William Hill Acquisition
US casino and online betting giant Caesars has posted its first quarterly financial report of 2021, and it shows it made a loss of $423 million over the first three months of the year.
That’s despite revenues increasing threefold on last year’s figure, from $473 million to $1.7 billion.
However, the market was clearly still a fan of Caesars going forward, as its stock price rose from $91 per share to $101 over a couple of days.
It’s only a modest rise of 6%, but it’s a positive sign considering the large quarterly losses the company reported just hours before.
Caesars Chief Financial Officer Bret Yunker summed up investor confidence in the company in the press release accompanying its Q1 2021 report.
“We are excited about the ongoing improvement in operating trends which we expect will lead to increased free cash flow generation”Chief Financial Officer – Bret Yunker
A $400 million loss is a big figure, but it’s an improvement on the $900 million loss in Q3 2020.
There are also several extenuating factors at play that may be keeping investors on board for now.
Caesars, alongside others like Evolution and Flutter, has been one of many global gambling giants to make a string of acquisitions and deals over the past year.
Just this April, Caesars closed the deal to buy out UK-based bookmaker and online casino provider William Hill in a $4 billion deal.
Only last year, Caesars merged with El Dorado Resorts to form one of the world’s biggest gambling operators.
As such, the conglomerate now has $15 billion in debt – although the market seems confident that it can handle it.
“We ended the quarter with $1.8 billion of unrestricted cash and our revolver availability remains unchanged at $2.1 billion,”CFO Mr. Yunker
Investor interest in Caesars was also boosted by Las Vegas’ continuing recovery from the economic effects of the COVID-19 pandemic.
Shortly after releasing its Q1 report (coincidence?), the company released figures for occupancy rates and bookings at its Vegas resorts going into April.
It was very positive by all accounts.
“Total occupancy for Q1 was 63%, with weekends at 85% and mid-week at 52%. March total occupancy was 77% and April was 84%,”President and Chief Operating Officer Anthony Carano.
“Weekends in Las Vegas are sold out for the foreseeable future,” he added.
If true, this could be big news for Caesars’ outlook.
Chief Exec Tom Reeg suggested investors look at their EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).
In April, he said they posted “$300 million as a company. That was more than 25% ahead of 2019 numbers.”
“Our first-quarter results improved significantly versus the fourth quarter of 2020 as the pace of vaccinations across the country accelerated and consumers started to resume more normal behaviors,” Mr. Reeg finished.
In addition to more visitors returning to Vegas, Caesars is hopeful that its investments in the growing online market in the US and redeveloping its physical resorts in Atlantic City will also keep that upward revenue trend going.
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