Nov
07

Twitter (TWTR) Soars On First Day of Trading, Leaves at Least $1 Billion on The Table

Twitter’s (TWTR) Market Cap At $24 Billion Following First Day Publicly Traded

After pricing their IPO at $26, shares of Twitter (TWTR) opened at $45.10 and briefly topped $50 before closing the day at $44.90, giving the company a $24 billion market cap. While most have praised Twitter and the handling of their IPO, I believe management really dropped the ball here. As has been widely reported Twitter loses money and has been investing in growth heavily, so they need as much cash as possible. They failed to raise anywhere near the amount of money they should have by significantly under-pricing their IPO at $26, seemingly giving more consideration to Facebook’s (FB) IPO debacle than to their own balance sheet. Had they priced their offering at even $40 per share, 12% less than what the market ended up valuing them at, Twitter would have added an extra $1 billion to the company’s coffers to fuel future growth. Twitter as a product is great, their social video network Vine is also loved by many with over 40 million users less than a year since launching. TWTR has a great deal of potential to monetize these platforms down the road, but management must be much more prudent in handling their finances moving forward or investors will suffer.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

Nov
05

City of Dreams Macau Growth Fuels Record Quarter for Melco Crown Entertainment (MPEL)

Melco Crown Entertainment (MPEL) Beats Estimates Once Again as City of Dreams Macau Continues to Dominate the Premium Mass Market

Having seen great quarterly reports from Las Vegas Sands (LVS) and Wynn Resorts (WYNN) come out the past couple weeks, it should come as no surprise that Melco Crown Entertainment (MPEL) once again beat estimates and reported record numbers. During Q3 2013 Melco Crown’s revenues grew 24% year-over-year to $1.25 billion, generating earnings per share of $0.33, a 68% increase. Adjusted EBITDA of $315 million represented a 39% jump from last year’s numbers, as City of Dreams continued to experience rapid growth in the mass market table games segment. Some highlights from their properties…

  • City of Dreams Macau net revenue was $958 million, up from $747 million in Q3 2012.
  • City of Dreams Macau Adjusted EBITDA of $298 million, up 46% from $204 million last year.
  • City of Dreams Macau mass table games revenue grew 73% year-over-year, the primary driver of the improvement in Adjusted EBITDA.
  • Altira Macau revenue was $242 million, up from $216 million.
  • Altira Macau Adjusted EBITDA remained at $30 million, flat from Q3 2012.
  • Mocha Clubs revenues grew 9% to $40 million, Adjusted EBITDA increased 20% to $11 million.

MPEL Update on Progress at Studio City Macau and City of Dreams Manila

Melco Crown’s CEO Lawrence Ho also provided an update on the status of their two major projects, Studio City Macau and City of Dreams Manila…

Studio City remains on budget and on track to open in mid-2015 with clear progress being made on the main superstructure following the successful completion of the foundation and piling work. This cinematically-themed integrated resort located in Cotai represents a powerful and complementary addition to our current portfolio of operating assets in Macau, offering a unique array of entertainment and interactive attractions which will cater to a broad range of customers in Macau and help drive diversification of the Macau economy.

We recently announced City of Dreams Manila as the brand of our integrated casino resort in the Philippines which, together with an ultra-luxurious Crown Towers branded hotel, demonstrates our commitment and confidence in this exciting leisure and entertainment market. We believe our experience in developing and operating integrated resorts in Asia, our unique competitive position in the VIP segments and experience in delivering world-class entertainment, together with our strong local partner, means we are in a unique position to capitalize on the economic growth in the Philippines and the region, and support the Philippine Government’s leisure and tourism objectives.

City of Dreams Manila is Melco Crown Entertainment’s first foray outside of Macau, representing the next step in our mission of becoming the leading gaming and entertainment company in the region. We continue to investigate opportunities in other key Asian markets where they meet our strict approach to the deployment of capital, including Japan.

The mention of Japan is noteworthy as many believe a casino bill will be passed during the next legislative session, as a means of housing and providing more entertainment to tourists in anticipation of the 2020 Summer Olympics in Tokyo. Prime Minister Shinzo Abe is a supporter of the casino bill, expected to generate $10 billion a year in economic benefits, and his high approval ratings significantly increase the likelihood of the it being passed. Many analysts see Japan becoming the second biggest gaming market in the world should the bill go through, surpassed by only Macau. Melco Crown stated in September that they would invest more than $5 billion in Japan casino resorts if granted permission to do so. The opening of Studio City Macau and City of Dreams Manila will drive huge growth for Melco Crown alone, but the possibility of  a Japan property should be viewed as a huge potential catalyst for shares. Melco Crown Entertainment has a bright future and we expect them to continue to outperform as Macau continues to thrive. Their strong quarterly results support our prior recommendation of MPEL, and they remain one of our top picks.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

Nov
01

Macau Gambling Revenues Reach Record High In October

Gambling Revenues In Macau Grow 32% During October

After seeing very strong 3rd quarter  results from Las Vegas Sands (LVS) and Wynn Resorts (WYNN), it appears the momentum in Macau is still picking up steam. During October, gambling revenues in the region totaled $4.6 billion, the highest monthly total in history. During the Chinese Golden Week holiday, historically one of the most profitable weeks of the year in Macau, visitors from mainland China increased by 10.7% year-over-year. This jump can be attributed to the continued rise of the “mass-market” segment, composed of China’s growing middle class. These visitors are coming in higher numbers and spending more money than ever, a huge positive for the industry as it reduces the casino operator’s reliance on the more volatile VIP market, made up of super wealthy “whale” gamblers. Melco Crown Entertainment (MPEL) stands to be a big beneficiary of this trend as their City of Dreams Macau property is the dominant player is the mass-market sector. Hotels were near full capacity for the Golden Week despite the cheapest five-star room on the Cotai Strip priced at $737 per night. With such a strong start to the 4th Quarter in Macau, LVS, MPEL, WYNN and MGM are well positioned to outperform expectations for Q4 2013.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

Go to top