UNITE HERE Raises Questions about Significant Insider Sale and Slow Growth at Red Rock Resorts

As investors review the proposed secondary offering of Class A shares of Red Rock Resorts, Inc. (NASDAQ:RRR), UNITE HERE is urging caution as three top Red Rock executives are registering to sell all the shares they can sell (excluding their restricted shares).

“Investors should ask why three of Red Rock Resorts’ top executives are cashing out their ownership stakes merely a month after management presented on the company’s ‘superior operating performance’ and ‘significant growth opportunities’ at investor conferences,” said Ken Liu, an analyst with UNITE HERE Gaming Research. Executive Vice Chairman Stephen Cavallaro, President Richard Haskins, and CFO Marc Falcone are registering to sell a total of 3,266,832 Class A shares in the proposed secondary offering.

The significant insider sale is one of the issues raised in a new presentation UNITE HERE Gaming Research released in advance of Red Rock Resorts’ third-quarter results conference call. The group also calls into question the potential cannibalization effect of the company’s newly-acquired Palms casino and the prospects of its several greenfield casino sites in the stagnant and saturated Las Vegas regional market.

UNITE HERE Gaming Research also published a companion interactive map of the congested Las Vegas regional market, from which Red Rock’s operating subsidiary, Station Casinos, derives approximately 85% of its EBITDA. In the firm’s other segment – developing and managing tribal casinos – Station Casinos has not signed a new deal since 2004.

The proposed secondary offering of Red Rock Class A shares will allow pre-IPO owners like Deutsche Bank to sell off their ownership stakes in the Las Vegas gaming company. The offering is for up to 37,514,810 shares, while the company had 41,448,530 of Class A shares outstanding as of June 30, 2016.

“We believe Deutsche Bank to be a motivated seller,” said Liu. “Deutsche investors should certainly welcome the cash infusion and capital boost from selling off its casino assets.”

UNITE HERE Gaming’s presentation also updates investors on recent developments in labor relations at Red Rock Resorts.

UNITE HERE represents workers in gaming, hotel, and food service industries in North America and provides analysis from the perspective of those who work in these industries.

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