Shares in Star Entertainment Group embarked on a rollercoaster ride on July 13 due to a mixed new day. Investors saw Star Entertainment’s share rally to a high of $2.91 before plummeting back to $2.68 per share. This represents a 0.74% fall for the day.
The stock market is a complicated beast, but it often follows certain trends. Supply and demand dictate a security’s price. It increases when more people want to become an investor in the company.
Conversely, the share price falls when investors sell their holdings. Investors buy and sell for many reasons, but tend to buy on the back of good news and sell after hearing anything negative.
Star Entertainment released some positive news before the markets opened but the negative press devoured those price gains.
The positive news came in the form of revealing the Queensland Government is no longer considering a second casino on the Gold Coast. This leaves Star Entertainment as the only operator, for now. Star’s management naturally welcomed the Queensland Government’s decision.
“The Star Entertainment Group welcomes the Queensland Government’s decision to end the second Gold Coast casino licence process. The Star and the Queensland Government have mutually agreed to conclude the exclusive negotiation process in relation to a Global Tourism Hub on the Gold Coast as agreement could not be reached. In parallel, The Queensland Government has also ended the broader market process for a second casino licence on the Gold Coast and has stated that there is no intention of reviving it.”
Investors Worried About Confirmed COVID-19 Case
Star’s share price soared on the back of the Queensland-related news but those gains were wiped out later that day. An announcement to the Australian Securities Exchange (ASX) did the damage and sent investors into a selling frenzy.
The Star announced one of its patrons had tested positive for the COVID-19 virus. Reopened casinos record details of every customer passing through their doors. The NSW Health department informed Star Entertainment a customer who was at Star Sydney on July 4 has COVID-19.
Processes are in place to conduct contact tracing. Star is reaching out to all customers and staff members who could have come into contact with the infected patron. These people will need to undergo testing to determine if they too have contracted COVID-19.
Investors offloaded shares like they are going out of fashion, resulting in the share price dropping like a stone. They are hoping for no further positive test results because drastic action will be needed.
A complete closure of Star Sydney isn’t out of the realm of possibility if a COVID-19 outbreak occurs.
The ASX Announcement attempted to reassure Stars’s investors by saying the company is following strict protocols. These include, but aren’t limited to, enforcing social distancing and a daily comprehensive clean of the property. Star shuts down from 06:00 to 10:00 every day for cleansing.
Star’s investors have endured a rough ride this past year. Shares in Star Entertainment haven’t been a great buy for investors because they’re almost 35% cheaper than 12-months ago.
Risk Of A Second COVID-19 Wave
Scientists around the world believe a second wave of COVID-19 is inevitable. We’re already seeing clusters of outbreaks not only in Australia but around the world.
Metropolitan Melbourne is back in Stage 3 lockdown following a sharp increase in confirmed COVID-19 cases. Lockdown measures remain in place for at least the next six week. Crown Resorts’ Melbourne property is the biggest name affected. Crown hoped to reopen this casino and hotel in July but that 100% isn’t happening.
Casinos in Australia and around the world are already feeling the pain of no or reduced revenues. Any further lockdown measures will see the gambling landscape drastically change, possibly forever.