SkyCity Share Price on the Cusp of a Bullish Breakout

The SkyCity Entertainment share price has staged an impressive recovery after dropping to a record low in 2020 amid the coronavirus pandemic. The stock is trading at A$3.38 in Australia, up by more than 200% from its lowest level last year.

SkyCity recovery continues

SkyCity is a large entertainment company whose shares are dual-listed in New Zealand and Australia. The company runs large casino operations in the two countries. It also launched SkyCity Online Casino in 2019 to complement its existing physical products.

Therefore, the SkyCity share price tumbled in 2020 as New Zealand and Australia implemented large lockdowns that affected local and international demand. 

This performance was reflected in the company’s earnings. The company’s total revenue declined from $412.5 million in the six months to 2019 to $315 million in the six months to December last year. Subsequently, its total profit declined from more than $327 million to $78 million. 

Most of the revenue decline was for the Auckland properties that declined from $305 million to $230 million. Similarly, revenue in Queenstown declined by $7.1 million to $5.9 million. This decline was offset by a 7.8% incrase of Hamilton’s properties and a 15.8% increase of Adelaide’s revenue. Most importantly, the revenue was offset by a 2,037% increase in its small online-e-sports business that generated more than $8.1 million in revenue.

Therefore, the SkyCity share price has done well because investors believe that the physical and online gaming industries will grow as New Zealand and Australia ramps up coronavirus vaccinations. New Zealand has already fully vaccinated more than 191,000 people, according to data compiled by Google. More than 371,000 people have already received at least one dose of the vaccine. Therefore, as this trend continues, there is a possibility that the industry will bounce back.

Further, investors believe that the ongoing demand for online gaming products are bullish for SkyCity. In the past few years, the industry in New Zealand and internationally has grown substantially. Indeed, its online platform has become one of the NZ casino sites a few years after it was launched.

SkyCity Entertainment share price forecast

The daily chart shows that the SkyCity share price has been in a strong upward trend after it crashed in 2020. The stock is hovering close to its highest level since February 2020. The uptrend is also being supported by the 25-day and 50-day moving average and the ascending trendline that connects the lowest levels on August 12 and September 2 last year and February this year. It is also attempting to move above the highest point this year. 

Therefore, the stock will likely keep rising as investors target the highest point on January 17. On the flip side, a drop below $3.16 will invalidate this prediction.

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SkyCity Stock Chart

SkyCity Share Price

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