Sheldon Adelson Has Lost an Estimated $8 Billion in 2014 through LVS Stock Decline
Las Vegas Sands Corporation has seen the share prices on its stock plummet throughout 2014. From the beginning of 2014, stocks have lost over 25% of their value, while analysts expect even more of a drop by the end of the year. Revenues compared against this time in 2013 show that revenues are down 30%, which indicate stock prices are likely headed towards a 30% decline. Even worse, LVS Corp’s decline is even steeper since the beginning of the summer–near 40%.
The high price of Las Vegas Sands Corp stock this year is $88.28, with a low price of $49.92. The closing price when trading ended on Friday, November 7, is $59.53. Those familiar with Las Vegas Sands Corp. know the losses have little to do with Las Vegas itself. The vast bulk of LVS’s revenues come from Macau these days: the Venetian Macau Casino and the Macau Sands Resort. Therefore, the losses are directly tied to the decline in revenue in Macau, China.
Li Xinping’s Anti-Corruption Purges
Macau’s losses are themselves caused by fallout from the anti-corruption investigations by China’s president, Li Xinping. In 2013, Li Xinping began an anti-corruption campaign against the Communist Party, whose officials are often known for their extravagence and conspicuous consumption. The anti-corruption agenda proved to be popular with everyday Chinese people, who have grown used to decades of corruption from insolent officials. Those officials seemed to operate with impunity, so Li’s investigations gained him popularity.
In fact, most analysts in 2013 thought the party purges were nothing more than a ploy to gain popularity. Those analysts assumed the campaign would be over soon enough. Instead, Xi Jinping began to investigate corruption of China’s new financial class. China’s economic boom has seen the rise of capitalists in Shanghai and Hong Kong, who are also known among their own people for their consumption and sometime corruption. When the investigations broke into the financial world of China, then it began to affect a much wider segment of the population. Still, those purges were popular with China’s new middle class, who often embody typical western bourgeois ideals.
The anti-corruption campaign was bound to have an economic impact on the country, though.
One American businessman recently described doing business in China as surreal. He said that one would be negotiating with a business executive or party official, as if everything was normal. One day, such a person would be gone, with no word about what happened to them. The American, who wished to remain anonymous, said this had happened several times in his personal experience.
Sheldon Adelson May Lose $10 Billion in 2014
Sheldon Adelson, President and founder of the Las Vegas Sands Corporation, has lost between $8 billion and $10 billion from his fortune in 2014. Gambling readers should not weep too many tears for LVS’s controversial leader, though, because it is estimated the gaming executive is still worth about $30 billion, making him the 12th-richest person on Earth.
Adelson’s rise in stature over the past 10 years is remarkable. As late as the 1990’s, Sheldon Adelson was seen as a second-rank casino gaming executive. His Las Vegas Strip properties, like the Sands Hotel and Venetian Casino, were a fixture in the city’s landscape, but they were well behind competitors like Caesars Entertainment, MGM Resorts, and Wynn Resorts.
The Venetian Macau
Then Adelson built the Venetian Macau in the former Portuguese gaming enclave of Macau. The city had been transferred to Chinese sovereignty in 1999, as an old treaty said that it should. Suddenly, China had a gambling capital. These Chinese government was long ambivalent about Macau. Like Hong Kong, the gaming city was given special privileges, due to its European ties.
Over the next ten years, Macau grew into the world’s biggest gaming hub, with revenues seven times what Las Vegas generates in a year. The Venetian Macau was the primary gambling destination in the city, making it the premier gaming venue in the world. Sheldon Adelson got rich off the proceeds, but that wealth was tied to with the goodwill of the Chinese government. If ever their whims turned against Macau, the billions of dollars invested in the city would be for naught.