Gambling stocks rally after miserable Monday amid US recession fears
Companies’ shares plummet, before rebounding by market close, as concerns grow that the US economy is about to go into reverse
Gambling stocks on both sides of the Atlantic tumbled on Monday (5 August) amid wider fears that the US economy is edging towards a recession, before rebounding by market close.
Shortly after the market opened in New York, DraftKings plunged 10% to $28.26, although investor confidence returned as the stock recovered to $31.80.
The operator’s closing share price was 0.7% down on Friday (2 August), with the market also having baked in DraftKings’ Q2 earnings report and plans for a gaming tax surcharge on customers in states with tax rates higher than 20%.
Caesars Entertainment was also affected by capital flight, with the Las Vegas-based firm’s shares down 11% to $32.47 at one point after a Friday close of $35.66.
The casino giant’s stock rebounded to about $34.50 by early afternoon, yet closed out at $33.20, down 6.9%.
Rush Street Interactive also had a day to forget, with its shares plummeting 15% to $8.56 at one point, before rallying to $9.48.
Meanwhile, Flutter Entertainment fell as low at $175.59, having closed out Friday at $187.59, although FanDuel’s parent company closed at almost $182.
Super Group, the owner of Betway and multi-brand casino Spin, was down almost 8% to $3.40, while PENN Entertainment slipped 5% to about $17.
In London, Entain’s shares opened at 513p on Monday after having closed at 541p on Friday. A further decline to 500p came by mid-afternoon before finishing the day on 517p.
The FTSE 100 operator, which is due to report its Q2 earnings this Thursday, is currently trading at 509p, down almost 2% on the day.
There was turmoil on the main indices on Monday, initiated by sharp falls on stock markets in Asia, stoking fears that economic growth is slowing in the US following much lower-than-expected job creation in July.
Japan’s Nikkei suffered its worse fall since Black Monday in 1987, while Australia saw more than $100bn wiped off the value of listed companies. However, the Nikkei surged 11% today to regain most of yesterday’s losses.
The tech-heavy Nasdaq plunged 3.4% on Monday and it was a similar story with the S&P 500, which dropped 3%.
There are mounting concerns surrounding shares in technology companies, particularly those focused on AI, and whether they have been overvalued.
Nvidia, which has been the darling of the public markets in recent months, was down 15% at one point yesterday, before closing out Monday at just above $100. The chipmaker has lost about $1trn in value since June.
Meanwhile, Berkshire Hathaway, owned by investment titan Warren Buffett, has offloaded roughly half its stake in Apple.
Claudia Sahm, a former Federal Reserve economist, told Bloomberg TV that the US is getting “uncomfortably close” to a recession.