Wynn Resorts Ltd. (NASDAQ: WYNN) saw its stock decline sharply on Friday, even after the company reported first-quarter earnings that surpassed Wall Street expectations. The drop was driven by investor unease over a delayed resort timeline in the United Arab Emirates and the announcement of a significant new expansion at the Wynn Palace in Macau.
Shares of the casino operator fell $7.21, or 6.7%, to $99.64 in midday trading on a day when the broader market was mixed. The decline contrasted with the performance of its peers: Las Vegas Sands (NYSE: LVS) slipped just $0.73, while MGM Resorts International (NYSE: MGM) edged up $0.31, as investors assessed the varying outlooks for Macau and Las Vegas operators.
Q1 Earnings Beat on Macau Strength
For the quarter ended March 31, Wynn reported operating revenue of $1.86 billion, a 9.2% increase from $1.70 billion in the same period last year. Net income attributable to Wynn Resorts rose to $120.5 million, or $1.25 per diluted share on an adjusted basis, compared with $72.7 million a year earlier. The adjusted profit topped the consensus estimate of $1.18 per share, according to LSEG data cited by Reuters.
The outperformance was largely attributed to stronger results from Macau, where Wynn operates both the Wynn Palace and Wynn Macau. Adjusted Property EBITDAR—a key operating metric that excludes interest, taxes, depreciation, amortization, pre-opening costs, and certain rent expenses—climbed to $562.4 million from $532.9 million.
Wynn Palace Drives Growth
Wynn Palace was the standout performer, with revenue surging 23% to $659.3 million and adjusted property EBITDAR reaching $203.8 million. In contrast, Wynn Macau posted flat revenue of $329.9 million, while its adjusted property EBITDAR slipped to $75.6 million.
In Las Vegas, revenue rose 5.9% to $661.9 million, with adjusted property EBITDAR up 4.1% to $232.5 million. CEO Craig Billings told analysts that March was the strongest month ever for the company's Las Vegas properties, with revenue per available room (RevPAR) climbing nearly 10% year-over-year.
Massive Macau Expansion on the Horizon
Wynn disclosed plans for a major expansion at Wynn Palace, dubbed "The Enclave at Wynn Palace." The project includes a 432-suite tower adjacent to the resort's east entrance, with a budget of $900 million to $950 million, including capitalized interest. Construction is expected to begin in the second half of 2026 and take about two and a half years to complete.
Billings emphasized that the tower is not a speculative bet, noting that Wynn Palace is currently operating at approximately 99% occupancy. He clarified that the expansion includes no gaming component; instead, it is designed to funnel guests into the existing casino, restaurants, and other resort amenities.
UAE Project Faces Delays
The biggest overhang for investors remains the Wynn Al Marjan Island project in Ras Al Khaimah, UAE. Billings reported that construction is progressing with over 22,000 workers on site, but ongoing logistics and shipping challenges in the region have led to what he described as a "modest delay" in the opening schedule. The company expects to provide a more precise timeline in the coming months.
During the first quarter, Wynn contributed an additional $100.1 million to the Al Marjan joint venture, bringing its total cash investment to $1.01 billion. The company's remaining 40% equity commitment for the project and related developments is estimated at $350 million to $450 million. The official opening date remains targeted for 2027, though the delay could push pre-opening expenses higher and delay cash returns from the UAE.
Other Challenges and Capital Returns
Wynn also faced headwinds at Encore Boston Harbor, where revenue fell 1.7% and adjusted property EBITDAR declined 12.1%. The company continues to return capital to shareholders, with the board approving a $0.25 quarterly dividend payable on May 29 to holders of record as of May 18. First-quarter share buybacks totaled $53.8 million.
Analysts remain cautious about the stock given the capital-intensive pipeline and the uncertainty around the UAE project. Macau's performance remains tied to high-end demand and table-game hold volatility, while the Las Vegas operations face potential headwinds from a slowing economy. The company's ability to execute on its expansion plans while managing costs will be key to investor sentiment in the coming quarters.
