The Index's decrease in May was due in large part to the largest company in the Index, Las Vegas Sands Corp., which saw its average daily share price fall more than 10% in May. The dip followed first-quarter results that showed lower margins for Sands in Macau due to new competition from MGM Mirage in that market, according to Las Vegas-based Applied Analysis, which created the Index.
The average daily share price is one of the main factors that affects the Index, and its impact is weighted based on the market capitalizations of the companies in the Index. In addition to Sands, which has the largest market cap, those companies include MGM Mirage, Harrah's, Boyd Gaming, Station Casinos and three manufacturers of gaming machines and equipment, International Game Technology, WMS Industries and Bally Technologies.
Applied Analysis principal Brian Gordon says that while the average daily share price of Sands, MGM Mirage, Harrah's and Boyd Gaming all decreased during the month, valuations began rising again toward the end of the month. If those gains are maintained, the results from June may reverse the course that has seen the Index lose 10% of its value since the end of January.
The S&P 500, when calculated on a similar basis to the Gaming Index, moved up 3.3% in May while the Index declined 5.3%. Relative to this time last year, the Gaming index is up 19.4% and the S&P 500 is up 17%.
The average daily share price of Sands fell 10.68% in May, from $88.86 to $79.37, putting nearly 27.5 points of negative pressure on the Index. MGM Mirage's average share price fell 4.71% to $68.08, putting another 4.3 points of negative pressure on the Index, while Wynn Resorts' fell 3.25% to $98.11, pushing the Index down another 1.27 points, and Boyd Gaming fell 3% to $46.83, pushing the Index down another 0.18 points.
Bally Technology saw its average daily share price rise 4.2% in May to $24.23, but due to its relatively low market cap, it offset the negative pressure by only 0.23 points. The other two manufacturers also saw their average daily share prices rise on the strength of new orders, putting a combined 3.16 points of positive pressure on Index. Harrah's, which saw its daily average share price rise 0.24% in May to $85.45, offset the Index's decline by 4.16 points.
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