Wynn Resorts, Limited (WYNN) Stock Jumped 7% After News On A Merger With MGM Resorts Surface

Wynn Resorts, Limited (NASDAQ:WYNN) stock surged more than 7%. This was after The Street’s Jim Cramer shared on CNBC that there was speculation about Wynn’s merger with its rival, MGM Resorts International (NYSE:MGM).

Both casino operators have been under a financial distress due to tumbling operations in Macau, where Wynn Resorts conducts 65% of its business.

When Wynn posted its first quarter of fiscal 2019 (1QFY19) results, the stock declined 16%. The company missed the Street’s revenue and earnings per share (EPS) expectations, and slashed the dividend per share from $1.5 to $0.5.

The casino operators earned $1.09 billion in revenues, missing the $1.12 billion consensus estimate. For the initial three months of 2019, Wynn’s revenue stream shrank 38%, compared to 1QFY18. Moreover, Wynn Resorts’ EPS fell to $0.7, compared to analysts’ expectation of $1.19.

On the other hand, MGM Resorts’ 1QFY19 EPS surpassed analysts’ estimates by $0.13, and escalated 50% relative to 1QFY18. However, its revenue dropped 11.3% year-over-year (YoY), and missed the Street’s estimates.

As news of the speculative merger surfaced, Wynn stock’s trading volumes hiked. 5.6 million Wynn shares traded hands, which was significantly higher than the average trading volume of 2.6 million.

As for MGM Resorts, 14.4 million shares were traded, while its daily trading average is 12.3 million.

Wynn stock closed at $109.44, gaining 7.24%. The stock has nose-dived 27.62%. On the other hand, MGM stock gained 2.89%, closing at $20.28. The stock has shed 5.14% of its value, year-to-date.

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