Posted on : October 16, 2026, 12:20h.
Last updated on : October 19, 2026, 05:18h.
Todd Shriber Todd Shriber is a senior news reporter covering gaming financials, casino business, stocks, and mergers and acquisitions for Casino.org. Todd got his start in financial markets as a reporter with Bloomberg News... Click for more
Shares of Melco Resorts & Entertainment (NASDAQ: MLCO) slipped Friday after the stock was downgraded to “hold” from “buy” by Texas Capital analyst David Bain.
In midday trading, shares of the City of Dreams operator fell 2.31% on volume more than double the daily average, extending a slide that has seen the Macau casino stock shed 48.5% of its value over the past year.
Texas Capital analyst David Bain cited a “strong variance” between his third- and fourth-quarter EBITDA forecasts for Melco against consensus expectations. He also pointed to sluggish Macau gross gaming revenue (GGR) and China’s retroactively enforced tax on offshore trust assets as key catalysts for downgrading Lawrence Ho’s company to “Hold.”
Despite our rating change, we note MLCO’s free cash flow yield is above 20%, and it trades below its historical enterprise value/EBITDA,” observes Bain. “We could potentially become more constructive following a rationalization, in our view, of consensus estimates, and Macau GGR stabilization, particularly given our positive view of MLCO’s management and product offering.”
Bain trimmed his price target on the stock to $5.50 from $8.00, though the revised target still implies a potential upside of more than 30% from current trading levels.
As with other Macau casino operators , Melco is being weighed down by broader weakness in the special administrative region (SAR).
Bain noted that when September GGR in Macau is calculated on a daily run-rate basis, it marked the weakest month for concessionaires since January 2025. He added that channel checks from mid-October indicate no immediate rebound is in sight.
Compounding the problem for Macau operators, visitation from mainland China continues to rise, but a smaller percentage of those travelers are spending money on gaming floors upon arrival.
“We believe China macro, including prolonged deflationary pressures, sticky property market weakness and lower employment have had an impact,” adds Bain. “Checks also cite a potential GGR impact from China’s July 2026 20% tax on assets in offshore trusts, which has triggered restructuring and some capital liquidation — the rules are applied retroactively to the early 2020’s.”
In Macau, Melco’s core customers are premium-mass bettors and, to some extent, VIPs. In sanguine operating environments, those are compelling demographics to target, but with the junket system all but dead, competition for those gamblers is fierce.
That shift has triggered a sharp rise in promotional activity across the market, as operators spend aggressively to draw players into their properties. These elevated customer acquisition and retention costs could cap near-term margin expansion for operators across the enclave.
“Player reinvestment remains elevated, and based on our checks, one of six total concessionaires recently increased its promotional levels,” Bain concluded. “While we do not see the addition as changing the already elevated comp spend landscape, it causes us to be less optimistic promotional levels will decline over the next several quarters.”
Todd Shriber is a senior news reporter covering gaming financials, casino business, stocks, and mergers and acquisitions for Casino.org.
Todd got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long/short hedge fund, where he specialized in the trading sector and international ETFs leading up to and during the financial crisis. He joined Casino.org in 2019.
Currently, Todd analyzes, researches, and writes on ETFs for various web-based publications and financial services firms. Shriber has been featured and quoted in Barron's, CNBC.com, and The Wall Street Journal. His work can also be found on Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business, and Nasdaq.com.
He currently resides in Las Vegas, where he enjoys golf and taking his black lab to the dog park. He's also an avid sports fan and likes to wager on college football and the NBA. You can also find him at the three-card poker and roulette table, even though he knows better.
Contact Todd at todd.shriber@casino.org.
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