Analyst: Sands China Unaffected by Adelson Share Sale

Earlier this week, news broke that Dr. Miriam Adelson and the Miriam Adelson Trust sold $2 billion worth of Las Vegas Sands (NYSE: LVS) stock, causing the stock price to plummet. This announcement raised concerns among investors, but analysts believe that the sale will not have a negative impact on the company’s operations in Macau.

The offering was priced at $44 per share, which was significantly lower than the closing price of $47.66, leading to a sharp decline in the stock price on the following day. The transaction, initiated by Dr. Adelson, the widow of Sands founder Sheldon Adelson, did not involve her in the day-to-day operations of the gaming company, as highlighted by JPMorgan analyst DS Kim.

Kim reassured clients that the sale will not affect Sands China’s operations, as Dr. Adelson was not directly involved with the business. He also pointed out that the company plans to repurchase a portion of the sold shares, minimizing the impact on existing shareholders. While the sale was substantial, it did not involve the issuance of new equity, alleviating concerns about dilution.

The Sands portfolio encompasses properties in Singapore and Macau, where Sands China is the leading operator. Sands was one of the first US-based gaming companies to recognize the potential in Macau, which has now become the world’s top casino hub. Among US non-technology companies, few are as reliant on China for earnings and revenue as Sands. Fortunately, analysts believe that Dr. Adelson’s share sale does not reflect the future prospects of Macau.

In addition to selling her shares, Dr. Adelson is also venturing into basketball by acquiring a majority interest in the Dallas Mavericks. Speculation has arisen that this move, coupled with her son-in-law’s involvement in the LVS business, may lead the company to pursue casino gaming in Texas. However, recent gaming expansion bills in Texas were defeated, and the legislature will not revisit the issue until 2025.

Overall, analysts remain optimistic about Sands China’s future, with expectations that the company will return to 85% of pre-coronavirus earnings in the current quarter. Despite the significant share sale, the company’s core operations and future prospects appear to be unaffected.