Golden Entertainment: MACD Death Cross, Bollinger Bands Downward Trend Indicators

Based on Golden Entertainment's 15-minute chart, the Moving Average Convergence Divergence (MACD) indicator has recently triggered a Death Cross, which is a bearish signal indicating that the stock price may continue to decline. Furthermore, the Bollinger Bands are currently expanding downward, suggesting that the market trend is being driven by selling pressure. As of 09/03/2025 12:00, these technical indicators suggest that investors should be cautious and potentially consider reducing their exposure to the stock.

Bally's (NYSE: BALY) continues to navigate a complex landscape of debt reduction and aggressive expansion plans. The casino operator reported mixed results in Q2 FY 2025, with revenue growth and significant debt reduction, but also a notable decline in EBITDA margins and increased interest expenses. Let's break down the key financial developments and strategic moves.

Debt Reduction and iGaming Sale

Bally's made significant strides in reducing its debt through the sale of its iGaming division to Intralot (OTCPK: IRLTF) for €2.7 billion. This deal, completed in Q2 FY 2025, included €1.53 in cash and €1.13 in Intralot shares. The transaction reduced Bally's long-term debt by approximately $2.7 billion, bringing the total debt to around $1.82 billion. This move was crucial for Bally's as it aimed to lower its Debt/EBITDA ratio from an unsustainable 11x to a more manageable 8.7x, though still high for brick-and-mortar casino operators.

Impact on Financial Metrics

The debt reduction was accompanied by a reduction in interest expenses. In FY 2024, Bally's spent $310.3 million on interest, growing 9.3% year over year. With the debt reduction, annual interest expenses are expected to drop to around $100 million, significantly reducing the financial burden. Despite this, Bally's reported a net loss of $228.4 million in Q2 FY 2025, primarily due to interest on debt swallowing up any remaining profit.

Revenue and EBITDA Performance

Revenue growth was mixed in Q2 FY 2025, with total revenue of $657.5 million, growing approximately 5.7% year over year. This growth was driven by increased GGR from both brick-and-mortar casinos and iGaming, with Total GGR growing 9.8% year over year. However, EBITDA margins compressed, with EBITDA dropping by nearly 11% year over year to $93.1 million. This suggests that while Bally's is growing in revenue, it is not yet generating enough profit to cover its expenses sustainably.

Expansion Plans and Risks

Bally's has ambitious expansion plans, including the two-phase construction of a new casino in Chicago and the $4 billion Bally's Bronx project. These projects are expected to generate significant revenue and create more jobs, but they also come with substantial long-term debt and potential dilution of shareholders. Additionally, regulatory risks, particularly in Europe, pose a significant challenge for Bally's. The company's majority stake in Intralot, while providing a strategic foothold, also introduces complexity in consolidation and potential leverage headwinds.

Conclusion

Bally's has made progress in reducing its debt and expanding its operations, but the path forward is fraught with challenges. The company needs to continue tightening operations, squeezing more margin from its brick-and-mortar casinos, and managing its expansion plans carefully to avoid overwhelming its balance sheet. Investors should remain cautious and monitor the company's ability to sustain growth and manage debt effectively.

References

[1] https://seekingalpha.com/article/4817951-ballys-deleveraging-to-leverage-again