Star Entertainment shares flop 6% to an all-time low amid critical inquiry

There's a perfect storm of negativity surrounding this ASX 200 casino operator…

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Sure, it hasn't been a great start to the trading week for the Australian share markets so far today. At the time of writing, the ASX 200 has lost 0.48% of its value and is down to around 7,750 points. But let's talk about what's going on with Star Entertainment Group Ltd (ASX: SGR) shares.

Star shares are having a horrid day, no way around it. The ASX 200 gaming stock closed at 50 cents a share last week. But today, the company opened at 48 cents and is presently down to 47.8 cents each. Not only is that a running loss of 5.54%, but it puts Star shares at an all-time record low.

Yep, since listing in its own right back in 2011, Star Entertainment shares have never before touched the levels that we are seeing today.

So what might be causing this terrible day for Star Entertainment shares and their owners?

What's up with Star Entertainment shares today?

Well, we don't have to look too far. There are two factors that we can point to today that probably explain why Star shares are at a new record low.

Firstly, the update Star released last week. On Friday, the company put out a trading update, covering the third quarter of FY2024, that was less than enthusiastically received by investors. This told the markets that over the three months to 31 March, Star's revenues declined by 4.6% over the prior corresponding quarter to $439.5 million. That led to the company reporting a normalised earnings loss of $6 million.

On the bottom line, Star also reported a statutory net loss after tax of $49.7 million. Additionally, the company revealed an uptick in operating expenses. Star told investors that its expenses had increased to a monthly average of $92.1 million, up from an average of $90.3 million over the first half of the financial year.

Investors were not impressed. Friday saw the Star share price tank by a nasty 7.27%. It's possible that the selling momentum that formed in the wake of this report is continuing today.

Investors spooked amid new enquiry

Secondly, today is the first day of the second enquiry into Star's suitability to hold a casino operating license in New South Wales. Known in some quarters as the 'Bell Two Enquiry' after its boss Adam Bell SC, this investigation comes after 'Bell One' found Star unsuitable to hold a license in NSW in 2022.

Although today is only the first day of this enquiry, it is probably not sitting well with investors, given Star's very future as a company is at stake. Further, the company (and investors) are also still dealing with the aftermath of former CEO Robbie Cooke's resignation just last month.

At the time, Cooke stated, "I have reached the conclusion that my continuation in the Group CEO role is not going to be conducive to the NICC determining to find The Star capable of becoming suitable to hold a casino licence in NSW".

No doubt nervous shareholders will be watching how the enquiry unfolds with bated breath.

Star Entertainment shares are now down 68.2% over the past 12 months.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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