Steve Wynn Accused of Sexual Misconduct; WYNN Shares Drop 10%, Could Fall Another 10%
Wynn Resorts (WYNN) chairman and CEO Steve Wynn has been accused of sexual misconduct by multiple women. The allegations, spanning several decades, include charges that Wynn pressured employees to engage in sexual activity. WYNN says the claims are part of a smear campaign related to his divorce and orchestrated by ex-wife Elaine Wynn, seeking a revised divorce settlement. While Steve too has personally denied the allegations (calling them preposterous), it’s been reported that a former manicurist received a $7.5 million settlement (personally paid by Steve, not WYNN) after being forced to have sex with the billionaire casino mogul. Shares of the hotel & casino operator declined -10.2% (down to $180.29 at Friday’s close), following news of the allegations.
Howie Long-Short: A recent WYNN securities filing stated, “if we lose the services of Mr. Wynn, or if he is unable to devote sufficient attention to our operations for any other reason, our business may be significantly impaired”; a viable concern after watching the falls of Roger Ailes and Harvey Weinstein. Should Wynn be forced to resign (no succession plan is in place), gaming analysts believe the stock could drop another 10%; having assigned a 20% “Wynn premium” to the stock’s value. Earlier in the week the company hit a 3-year high ($201.99), following release of an earnings report that reflected a 184% YOY increase in profits (revenue was up 30% to $1.69 billion) during Q4 2017.
Fan Marino: If the Massachusetts Gaming Commission (they’ve opened an investigation) substantiates the allegations, WYNN’s unlikely to receive a gaming license in the state. That’s a big deal with the company working on the biggest private construction endeavor in state history. Commission spokeswoman Elaine Driscoll is on record saying, “integrity of our gaming licensees is of the utmost importance”, indicating potential findings by the enforcement bureau pose a serious threat to the $2.5 billion Boston Harbor resort & casino project scheduled to open in 2019; particularly noteworthy with legalized sports betting likely to become reality before the end of June.
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