Light & Wonder Bit by Tariff Bug, Shares Slide

Posted on: May 8, 2025, 12:44h. 

Last updated on: May 8, 2025, 01:53h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Slot machine manufacturer says tariffs could lead to “incremental” cost pressures
  • Company attempting to mitigate effects of trade levies
  • Reiterates 2025 EBITDA forecast of $1.4 billion

Shares of Light & Wonder (NASDAQ: LNW) plunged Thursday after the slot machine manufacturer warned it’s feeling the effects of US tariffs.

Light & Wonder
Light & Wonder signage. The stock tumbled Thursday after the company said it’s feeling the effects of trade tariffs. (Image: X)

In midday trading, the stock was off 12.70% on above-average volume after the company told investors US trade levies could result in higher costs because the company imports components from China and other Asian countries targeted by the Trump Administration over what it deems to be unfair trade practices.

While we expect recent tariffs and trade policies to create incremental cost pressures in the near term, our realized and ongoing operational efficiency initiatives coupled with other measures are expected to mitigate these effects,” according to a statement.

Light & Wonder reiterated its 2025 adjusted earnings before interest, taxes, depreciation, and amortization forecast of $1.4 billion while reminding investors that guidance doesn’t include potential benefits from the charitable gaming assets it’s buying from Grover Gaming, Inc. and G2 Gaming, Inc. for $850 million.

Light & Wonder Vulnerable to Tariff Pressures

Since “Liberation Day” — President Trump’s plan to implement tariffs against an array of US trading partners — effects have been different across the gaming industry. For land-based casino operators, there are mounting fears a protracted trade war could trigger a recession, thus reducing consumer spending. Sportsbook operators could face a similar reality.

For Light & Wonder and gaming suppliers, the tariff scenario is different because their vulnerabilities lie in exposure to global supply chains. In the gaming device/slot machine industry, how manufacturers assemble devices varies from company to company, though most machines are put together and readied for use in the US. However, these firms are still heavily reliant on some Asian countries — several of which are tariff targets — for sourcing components.

Light & Wonder said it’s navigating a fluid situation by attempting to diversify its supply chain, negotiate prices with suppliers, and control costs, among other efforts.

“On the topic of our supply chain and the uncertainty of where tariffs will land, it’s important to note that we are a global company that operates in numerous product lines and business models, which are impacted to varying degrees by changing policies,” said CFO Oliver Chow on a conference call with analysts. “For the applicable parts of our business, we are largely in line with the industry in terms of the magnitude of impact.”

Light & Wonder Has Other Levers to Pull

On Thursday, the White House announced a new trade accord with the UK, indicating Trump is willing to work with trading partners to smooth things over. There’s speculation that some Southeast Asian countries, potentially including some that source parts to slot makers, are angling for talks with the White House as well.

However, China looms large.

The US and China — the world’s two largest economies — have yet to come to terms on a trade deal and it’s believed the two sides haven’t held talks to that effect. Light & Wonder has other mitigation avenues at its disposal should the US/China situation worsen.

“We have been executing the longer-term plans to enhance our supply chain and operational efficiency. This ranges from onshoring of production, relocation of sourcing, and utilization of agreements such as the USMCA,” added Chow on the call.