Crown Resorts Share Price Hurt by Coronavirus (ASX:CWN)
At time of writing, the share price of Crown Resorts Ltd [ASX:CWN] is down 3.02%, trading at $7.06.
Crown is an Australian company engaged in the gaming and entertainment business, with its largest location being in central Melbourne, coupled with locations in the United Kingdom and Macau.
The $5 billion company has been hard hit by the coronavirus — shedding more than 40% since 20 February.
According to an announcement made today, following consultation with the Victorian Government, Crown has implemented a policy covering a number of social distancing measures at its Crown Melbourne entertainment complex.
In effect from today, the measures include closing off every second gaming machine to distance people from each other, no doubt impacting Crown’s capacity to create income.
Coronavirus aside, Crown resorts were already experiencing softer trading conditions.
In February this year, Crown announced their half-yearly results with growth being largely flat compared to the year prior.
Chief Executive Officer Ken Barton noted that whilst some areas of the business were encouraging, others such as the VIP gaming at the Australian resorts was down 34.2% on the year prior.
Crown share price in a free fall
With poorer results than expected can Crown fight off the coronavirus?
Since September 2015, Crown’s share price has largely moved in a sideways pattern, bouncing between $9.80 and peaking at $14.59. At the start of December 2019, a downtrend in price started to emerge as can be seen in the above chart.
The last significant peak occurred at the end of November 2019, with a high of $13.25. The price fell from here on the expectation of weaker earnings. But once the coronavirus was injected into the situation, it went into a free fall to a price of $7.28 at the time of writing, representing a drop of over 45% from the high in November:
Where to from here?
Tourism set to wane, Crown share price could go as low as $4.20
The outlook for Crown and the Australian market overall is dire at present, to say the least. The Australian recently interviewed one investor who said that the Global Coronavirus Crash (GCC) is already beginning.
This combines with poor economic data released by China on Monday, which showed that the country’s output was pummelled by the coronavirus outbreak in January and February. The world’s second biggest economy looks unlikely to recover any time soon, according to CNN Business.
With Chinese tourism set to wane, this will have a direct impact on the Australian market and Crown.
With no end in sight for the impact of the coronavirus at this stage, the Crown share price may very well continue down to the next resistance level of $6.42, and should it fall below that, Crown may be looking at a price of $4.20 in the not too distant future.
For Money Morning
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