Boyd Gaming Corporation Stock Leaps After Construction Suspension
Boyd Gaming Corporation experienced a substantial jump in stock value this week as the company announced plans to suspend its multi-billion dollar Echelon project on the Las Vegas Strip. The new casino was not cancelled, but will lie idle for nine months to a year, awaiting more favorable credit markets and economic conditions.
The decision demonstrated Boyd's ability to make necessary hard moves in an unfriendly climate. While other casino companies have blithely continued to spend billions bringing new venues to existence in what is established as a shrinking market, Boyd received praise for recognizing the unpopular but correct path.
A gaming analyst from Citigroup said Boyd's move showed "financial discipline," while a representative from BMO Capital noted the decision removed considerable financial burden from the company as well as alleviating fears of failure.
The company's stock, which had followed many casino stocks on a months-long slide, moved up 20% on Friday following the news, from a close on Thursday just under $10 a share to closing Friday at $12.05.
Casinos stocks in general seem to be regaining some market respect, and to be considered good value, as many investment firms and funds have begun buying chunks of stock again.
Boyd has long carried a reputation as a company sensitive to the needs of the middle-class player, who does not have unlimited wealth to spend. Delaying a premier elite casino project while tending to the needs and desires of the average Las Vegas tourist, who is choosier right now about how to spend his entertainment dollar, smacks of good business, and should reward Boyd in the future.
