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When Sheldon Adelson took a chance and risked his personal fortune for an opportunity to jump into the casino market in Macau, he did so with many people thinking he was crazy. That risk paid off in a big way, and Las Vegas Sands stock has been rising now for many months.
On Monday, however, the stock decreased, with analysts believing the stock drop was due to the recently revealed Securities and Exchange investigation involving Sands’ business dealings in Macau. At issue is whether or not Sands violated the Foreign Corrupt Practices Act.
Former Sands CEO Steve Jacobs has made accusations that the company bribed officials. Sands has denied the allegations, but just the idea of possible corruption has some investors heading for cover. It is unlikely the Sands stock situation will change until the results of the investigation are revealed.
“While handicapping the end results of investigations of this sort are nearly impossible, we believe the headline risk will serve as an overhang on shares in the near term until more on the matter is known,” said Wells Fargo Analyst Carlo Santarelli, back when the investigation came to light at the beginning of March.
On Monday, Sands stock dropped to $38.10, a decline of 4.9% on the day. Most target prices for Sands were in the $42 to $47 range, making the news of Monday’s decline particularly upsetting to investors.
Sands is in the process of moving into the European casino gambling market, and that should help offset some of the negative press that has come from the investigation. The company is seeking to build a Las Vegas-type strip in Spain, and is just waiting on government officials to sign off on the deal that Sands will receive the support needed to complete the project.
March 14, 2011
Posted By Terry Goodwin
Staff Editor, CasinoGamblingWeb.com
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