AGEM Index Sets Record High, as Gaming Manufacturing Recovery Continues

Posted on: July 7, 2021, 02:02h. 

Last updated on: July 7, 2021, 02:55h.

Gaming manufacturing stock prices continue to surge, as the world emerges from the shallows of the COVID-19 pandemic. 

AGEM Index Sets Record High, as Gaming Manufacturing Recovery Continues
Aristocrat Leisure’s convention space at the Global Gaming Expo in 2019. Aristocrat is one of several leading gaming manufacturers that has seen its stock price increase over the past year. (Image: G2E)

The Association of Gaming Equipment Manufacturers (AGEM) compiles a monthly index of 13 major global gaming suppliers. Its June 2021 report places the AGEM Index value at 1,005.20 — the compilation’s all-time highest mark. 

At this time last year, the AGEM Index was at 407.31 points, meaning its valuation has surged 147 percent over the past year, or nearly 600 points. June’s 1,005 value was a 2.6 percent premium on May.

In the last month, seven of the 13 AGEM Index companies reported increases in stock price. Most of the stocks in the AGEM Index recorded triple-digit growth rates over the past year, with Scientific Games Corporation leading the way with a 400.9 percent improvement for its stock price since June 2020,” a note from the index explained.

Other notable gaming manufacturing publicly traded companies in the AGEM Index include Aristocrat Leisure, International Gaming Technology (IGT), and Everi Holdings. 

Casinos Fare Well

COVID-19 greatly damaged stock prices of various sectors of the US and global gaming industries. Similar to gaming manufacturing, publicly traded casino stocks have made significant gains as the pandemic subsides. 

The VanEck Vectors Gaming ETF (exchange traded fund) currently consists of 40 holdings, the majority being companies primarily engaged in operating large-scale casino resorts and sports betting. 

The gaming fund has delivered investors who invested in the investment vehicle this time last year a great return. On July 7, 2020, the VanEck ETF was trading at $33.65. Today, the fund closed at $51.87 — a 54 percent year-over-year jump.

Sports betting giant Flutter Entertainment, parent company to FanDuel, FOX Bet, PokerStars, Betfair, and Paddy Power, among others, represents 7.7 percent of the gaming ETF’s net assets. DraftKings is second at 7.05 percent.

The ETF is also heavily weighted by casino operators invested in both the US and Macau, including Las Vegas Sands (6.53 percent), and MGM Resorts (5.15 percent). 

The gaming fund recently hit its own all-time record high when it closed at $56.10 on March 19. 

Pent-Up Demand

Gaming executives are optimistic that the recovery is only getting started. After a year of being told to stay at home and avoid nonessential activities, Americans, many say, are itching for a vacation.

Las Vegas, perhaps the most critical market to the AGEM Index and Vectors Gaming ETF, believes the recent opening of the $4.3 billion Resorts World complex will only help return visitors to Southern Nevada. The multibillion-dollar development is the first new Strip casino in more than a decade. 

A brand-new Las Vegas opening like Resorts World can drive increased visitation,” opined Barry Jonas, managing director of Truist Securities. “As many customers looking to trial the new property also like to visit multiple properties during their stay.”

“Las Vegas doesn’t operate well without a crowd, and we’re going to be completely back to full stadiums, full arenas, full theaters, and all of the entertainment that everybody expects when they come to Las Vegas,” Steve Hill, chair of the Las Vegas Convention and Visitors Authority said recently.