What: Shares of Crown Resorts Ltd (ASX: CWN) have tumbled 49c or 3.1% today after the company announced it had acquired 34.6 acres worth of land in Las Vegas which has thus far cost Crown US$280 million ($300 million). The shares are now trading at $15.32, down 15.9% from their 52-week high.
So What: Although a move into Las Vegas has always been on Crown Resorts' radar and could provide a significant avenue for growth, investors are likely becoming cautious that the company is taking on more projects than it can handle.
The new Vegas casino, which is expected to be completed by 2018, is part of a casino development pipeline worth more than $6 billion which also includes the $1.5 billion hotel and casino at Barangaroo. Further project opportunities between Crown and its joint venture partner Melco Crown could extend that development pipeline to a massive $13 billion.
Now What: Since the announcement was made, Crown Resorts has been cut from 'Neutral' to 'Underperform' by Credit Suisse, indicating that they too could be becoming more cautious of the company's ambitions.
While most other blue chip stocks have managed to deliver solid returns this year, Crown has heavily underperformed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) Index. Offering a decent yield, Crown could be a good bet for investors over the long term.
An even better bet than Crown Resorts.
