Crown Shares Plunge, Sending Packer’s Personal Wealth Down $800 Million

Crown Shares Plunge, Sending Packer’s Personal Wealth Down $800 Million

James Packer has not had the best couple of years. He has seen his personal wealth of over 6 billion dollars reduced by $800 million due to the plunge in his company stock. Packer is the primary owner of Crown Resorts, which operates casinos in Australia, as well as entertainment and gaming venues internationally.

Packer’s Issues

James Packer’s personal issues are fairly well known. He was in a high-profile relationship for over a year and a half with American diva Mariah Carey. The couple became engaged with a 35-carat diamond ring, but never made it down the aisle, and split up in late 2016. Packer sought mental health treatment for addiction and mental health issues in early 2018. He spent months in a mental health facility. He also resigned as chairman of Crown Resorts, although retaining his holdings.

Packer’s resignation as chairman of the company was partly because he sought treatment for mental health issues. However, Crown Resorts were facing some legal entanglements of its own. The casino group was fined because its casino in Melbourne had tampered with a slot machine. In addition, the Macau government arrested 19 Crown employees and accused them of money laundering. The casino group paid the fines, and bailed out their employees. Four of the employees, who were Australian, were deported from the country.

Crown’s Downturn

Crown CasinoCrown stock has been on a slide since August. That is when investors began worrying about a slowdown of high-rollers to its casinos from Asia. The slowdown in Asia means that fewer gamblers are taking advantage of the junkets promised by Crown Casinos. Until this August, Crown Casinos were enjoying a healthy bottom line from Chinese gamblers, at Macau’s expense. Chinese gamblers had been fleeing Macau in droves due to a government money-laundering crackdown.

However, now it appears that the high-rollers from China, who are worried about an economic slowdown, are holding on to their chips. They are concerned about both the economic slowdown and the ongoing trade war with the United States. China’s economic slowdown is being felt all over Asia as well. The problems in China have translated into problems in Macau at all of the casinos. This causes earnings forecasts warnings from some of the big players. Wynn Resort and Star Entertainment, both rivals of Crown Resorts, have issued earnings alerts.

The Economic Impact

The slide of Crown shares translates into a loss of more than $800 million from James Packer’s personal wealth. The Crown Resorts stock has dropped over 20% since August. Because James Packer owns 46% of the company’s stock, his personal wealth has been compromised. If forecasts from Crown, Wynn and Star are correct, the stocks of all three companies may continue to slide south. High rollers have stated that until economic conditions in Asia have stabilized, they are keeping their money in the bank.

Crown’s first quarter update earlier this month also hasn’t helped the stock. While it appears that high-roller turnout is up slightly, it fell far short of forecasts. Both Morgan Stanley and Goldman Sachs estimated the VIPs would continue to return to Crown—but it hasn’t happened quickly.

However, hope may be on the horizon both for the Crown and for Packer’s personal fortune. Analysts have noted that many people will want to buy Crown now while the stock price is low, because it is expected to rise. One reason the stock will rise is that investors will consider it a solid buy, as the company has reported solid earnings in the past. In addition, the Crown Resorts in nearing completion on its huge new casino in Sydney, which is expected to captivate high rollers from across Asia and Oceania.

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