What Happened?
Shares of gaming, betting and entertainment company Bally's Corporation (NYSE:BALY) jumped 23.5% in the afternoon session after Truist Securities raised its price target on the stock, pointing to an improved company outlook.
The investment firm increased its price target to $13.00 from $11.00 but kept a 'Hold' rating. The more positive view on Bally's followed recent business developments. The company obtained partial consent from lenders to sell its Lincoln, Rhode Island asset. Bally's also completed the sale of its international interactive business, which generated approximately $1.0 billion in after-tax cash. The company planned to use these proceeds for paying down debt and other purposes, which helped improve its financial outlook.
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What Is The Market Telling Us
Bally’s shares are extremely volatile and have had 62 moves greater than 5% over the last year. But moves this big are rare even for Bally's and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 11 days ago when the stock dropped 2.6% on the news that worries over worsening trade relations with China were triggered by critical comments from President Donald Trump.
The President's comments, stating on social media that China has 'become very hostile,' injected significant volatility into the broader markets. This particularly affected the leisure industry, which is highly sensitive to economic sentiment and discretionary spending. Leisure stocks, which include companies in travel, entertainment, and hospitality, rely on consumers feeling confident enough to spend on non-essential goods and services. Trump targeted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. The president's tone and the suggestion of canceling a meeting with President Xi caused a rapid sell-off in the market.
Earlier in the week, China announced new export controls on the critical minerals. Beijing's Commerce Ministry stated that foreign suppliers now need government approval to export products containing certain rare-earth materials. These materials are essential for producing high-tech goods, including computer chips, electric vehicles, and defense technology. Analysts viewed the move as a strategic assertion of China's dominance in the global rare earth supply chain, particularly amid ongoing trade tensions. The prospect of escalating tariffs raises concerns about economic headwinds, which could lead to a slowdown in consumer spending. If consumers tighten their budgets in response to economic uncertainty, discretionary purchases are often the first to be cut, directly impacting the revenues of companies in this sector.
Bally's is down 18.9% since the beginning of the year, and at $15.77 per share, it is trading 28.5% below its 52-week high of $22.07 from November 2024.
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