Before there was online and mobile gambling from companies like Draft Kings (NASDAQ:DKNG) or Penn National Gaming (NASDAQ:PENN), there were the iconic brick and mortar casinos that dominated the gambling industry. One of those casino operators is Boyd Gaming (NYSE:BYD), a company founded back in 1975, that operates out of Las Vegas, Nevada. But you generally won’t find Boyd properties on the Las Vegas strip next to towering resorts from Wynn (NASDAQ:WYNN) or MGM (NYSE:MGM). Boyd operates a majority of its casinos in Old Vegas or Downtown Vegas, which is a more nostalgic area of the city. On top of this, Boyd operates in several other states where gambling is legalized including Louisiana, Missouri, Mississippi, Illinois, and Pennsylvania.
Predictably, Boyd Gaming took a hit during COVID-19 as brick and mortar casinos were closed to patrons. In 2020, Boyd was forced to lay off a minimum of 25% of its staff due to the pandemic, although many of those positions have been filled again as the casino industry opens back up. In March of 2020, Boyd’s stock hit a low point of just over $7.00 per share, a level that the company had not seen since 2013. Currently, BYD is trading at just over $60.00 per share, illustrating a near 775% return since its March lows. As the industry opens back up, can Boyd continue to exhibit this rate of growth in the future? Learn more
Boyd Stock Analysis: While Boyd’s brick and mortar properties are not really described as five-star resorts, the company certainly has a nostalgic allure from tourists who want to experience the more historic area of Las Vegas. Boyd noted in its 2020 10-K that a majority of its customers come from Hawaii, and just weeks ago in anticipation of domestic air travel reopening, Boyd inked an exclusive deal with Hawaiian Airlines. Boyd has also entered the digital gambling space with its Bconnected mobile app that allows users to earn Bconnected points and tiered credits, a similar system to MGM’s MyVegas Slots game for Facebook and mobile.
With that being said, Boyd’s BConnected Sports Betting app has a ways to go to catch up with online sportsbooks and casinos like Draftkings, the Barstool Sports Betting App from Penn, and BetMGM. Boyd Gaming lacks the mainstream appeal and younger demographic to truly launch a successful mobile app, so much of its revenues continue to come from brick and mortar gaming.
With each passing year more states have agreed to legalize online gambling and sports betting, which further shows Boyd is missing on capturing the fastest growing market. While the initial rush back to in person casinos may be strong, we have to wonder what the long-term outlook is for brick and mortar locations. As with many things, there will always be a subset of people who never return following COVID-19, and with the industry trending towards mobile apps and smartphone integration, the casino experience may never be the same again.
Over the short-term Boyd Gaming looks to capture the enthusiasm behind returning to in person activities as the U.S. opens back up. In the long-run, Boyd will need to drastically improve its digital experience to keep up with its competition. Over the past 52-weeks Boyd has grown by nearly 220% alongside the broader gaming industry in anticipation of brick and mortar doors reopening. There may always be a place in the industry for Boyd, but investors seeking faster, long-term growth are better off looking at some of Boyd’s rivals instead.