Wynn Resorts, which manages casinos from Nevada to Macau, tumbled further in Monday trading as regulators probed claims of improper sexual behavior by founder Steve Wynn, and Swiss bank UBS cut its rating on the stock.
Shares in the Las Vegas-based company dropped 8.5 percent to $164.89 at midday in New York, compounding a 20 percent decline on Friday after the Wall Street Journal detailed claims by dozens of former employees and others that Wynn, 76, had made unwanted sexual advances over a period of several years.
In a statement to the Journal, Wynn denied the claims, which come as the #MeToo movement — born in the aftermath of allegations that forced media mogul Harvey Weinstein from the company that bears his name — trains a spotlight on sexual harassment by high-profile entertainers, politicians, and others.
“These allegations and subsequent investigations will likely cap near-term upside in the stock,” Robin Farley, an analyst with UBS, wrote in a report downgrading the bank’s recommendation on the shares to hold from buying.
Still, the gaming company’s licenses and operations would be valuable even without Wynn, who owns 12 percent of its stock, Farley said. And regulators who find problems with an individual executive at a company typically don’t seek changes that would be damaging to all shareholders, the analyst noted.
Authorities in Nevada, where Wynn Las Vegas and Encore are located, didn’t immediately respond to requests for comment.
Massachusetts, where the company is developing the $2.4 billion Wynn Boston Harbor gaming resort, “is taking very seriously the troubling allegations detailed in the Wall Street Journal article,” the state’s gaming commission said in a statement.
“The suitability and integrity of our gaming licensees is of the utmost importance,” the commission said, and it will begin a regulatory review to decide what to do next.
The board of Wynn Resorts, meanwhile, formed an independent committee, chaired by former Nevada Gaming Commission member Patricia Mulroy, which has already begun working and will be assisted by an independent outside counsel. “The board is deeply committed to ensuring the safety and well-being of all of the company’s employees and to operating with the highest ethical standards,” members said in a statement.
Potential outcomes of the claims range from complete exoneration of Wynn to his resignation or suspension, a decision by Massachusetts to force the company to sell its license there and a sharp drop in demand from customers in Las Vegas, Nomura Instinet analyst Harry Curtis wrote in a report.
A further decline in the stock’s price to $150 would reflect even the worst-case outcomes, he said.
Regardless of whether the allegations are true, “this cloud will not go away any time soon,” Curtis added. “Given the trend in prior accusations, it is more likely that the issue intensifies in the near term unless the CEO resigns.”
