What: Crown Resorts Ltd (ASX: CWN) which counts billionaire Mr James Packer as a 50% shareholder has recorded a 13% fall in its share price over the past three months. The catalyst for the fall would appear to primarily be Crown’s 34% holding in the Nasdaq-listed Melco Crown Entertainment. Melco Crown which owns two casinos in Macau, China, has seen its share price sink 23% in the past three months.
So what: The plunging share prices come during a period in which the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has gained 1% and Australian-focussed competitor Echo Entertainment Group Ltd (ASX: EGP) has regained some composure and gained 5.5%.
For Mr Packer this means the value of his Crown investment has declined by around $700 million in the past three months. According to a report in the Australian Financial Review (AFR), major listed casino stocks with exposure to Macau have all been under selling pressure as investors worry that the strong growth rates may be a thing of the past.
Now what: With both Crown Resorts and Melco Crown trading on hefty multiples which imply high growth rates, it could be time for investors to take a long hard look at what earnings growth they expect these businesses to achieve going forward.