Why Now Is NOT the Time to Buy BALY Stock

Stock Market

Are you ready to spin the wheel and take a chance on Bally’s (NYSE:BALY)? Not so fast, as BALY stock could continue to lose value in 2023. A turnaround in macroeconomic conditions would certainly help Bally’s recover from its slump. Yet, the company’s fiscal figures should set off some alarm bells for cautious investors.

Don’t get me wrong: Bally’s is a huge and well-known company. Along with the company’s 15 casinos and resorts across the U.S., Bally’s has interests in the sports betting and iGaming segments.

Hold your horses, though. Financial traders, like casino gamblers, have to be detail-oriented and must have excellent timing in order to succeed. As we’ll see, there are troublesome details with Bally’s and this isn’t an ideal time to take a position.

What’s Happening with BALY Stock?

BALY stock might look like a bargain as it has declined from $70 in 2021 to around $20 per share recently. Keep in mind, however, that not every stock that has lost value is a bargain.

It’s awfully difficult to convince people to wager their hard-earned money on sports betting and online gambling during a time of elevated inflation. Sure, inflation has eased since June, but the average American doesn’t necessarily feel like the situation has improved much.

Like cruise lines and hotels, gambling businesses really need a strong push from the economy. Inflation isn’t cooling off quickly, and Americans need time to recover. Therefore, BALY stock traders should time their entry carefully, and wait for clear signals that macro-level conditions are improving.

Bally’s Debt Load Is Problematic

Which businesses will truly thrive when the economy gets better? Low-debt companies can likely turn around the fastest and deliver the best results. Bally’s isn’t in this group.

Recently, Bally’s finalized a sale leaseback transaction, and assured that a “substantial portion of the proceeds will be applied to reduce Bally’s debt.” This, however, begs the question of just how deep that debt is.

Suffice it to say, Bally’s debt load is a heavy one. The company’s most recently published quarterly financial report indicates $164.46 million in cash and cash equivalents. However, it also shows an eye-popping $3.41 billion in net long-term debt. That’s a tough position to be in, especially during a time when the economy could be shaky for a while.

What You Can Do Now

When it comes to BALY stock, watching and waiting is the best policy right now. You don’t have to be a gambler and take a position while Bally’s has so much debt.

This doesn’t mean you have to give up on the company completely. Feel free to check in, assess Bally’s upcoming financial statements, and place a very small bet if you discern substantial improvement.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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