Gambling sin stock Caesars Entertainment (CZR) saw its shares plummet more than 50% today (ending slightly higher than its bottom at only 40% off of the day) because of a ruling by a judge today.
Here’s the back story: Caesars Entertainment Operating Company owes billions of dollars to hedge funds. Apparently operations are not quite as lucrative as projections because it filed for bankruptcy earlier this year due to massive debt. Creditors are claiming that Caesars Entertainment (CZR) guaranteed the loans and they are predictably suing the casino company to recover their funds. Caesars Entertainment sought protection from these lawsuits.
Here’s what happened today: A judge denied Caesars request for protection, basically allowing the company to potentially be hauled into the lawsuit.
Will Caesars go bankrupt as well (making this an opportunity to short what’s left of the stock)?
Will they reach a last minute deal with creditors (making this a remarkable time to buy)?
What will this mean for other gambling sin stocks who are solvent and looking for a major brand acquisition?
Sin may provide significant returns… but for this sin stock, debt does not!
Sources: BusinessInsider and Reuters.