Stock Market

Carl Icahn Is Betting Big on Caesars Entertainment (CZR) Stock

Source: Jason Patrick Ross/

Hotel and casino giant Caesars Entertainment (NASDAQ:CZR) is up big on Friday following a major development. Billionaire investor Carl Icahn — known for his activist campaigns — recently revealed a “sizable position” in CZR stock, according to people familiar with the matter. Along with investor speculation on the disclosure, Caesars might become a target for a short squeeze.

According to a Bloomberg report, the “size of the Icahn’s stake and his intentions couldn’t immediately be learned.” Interestingly, as news broke about his wager in CZR stock, Icahn told CNBC that he was satisfied with the underlying company’s management team. Most notably, he stated he had no plans to generate an activist initiative.

Not surprisingly, CZR stock popped by the most in more than a year-and-a-half. At time of writing, Caesars commanded a market capitalization a bit shy of the $8 billion mark.

An interesting backdrop is that Ceasars failed to deliver the goods for its most recent earnings report. On April 30, the casino powerhouse reported an adjusted loss per share of 73 cents on revenue of $2.74 billion. Barron’s noted that “[n]ot only did those results miss Wall Street estimates, but the loss widened from the same period the year prior while revenue declined.”

CZR Stock Could Become a Target for a Short Squeeze

Still, even with the earnings miss, there’s important context to consider regarding CZR stock. First, circumstances outside of Caesars’ control negatively impacted the results. “We faced several transitory issues during the quarter, including low table hold in our Las Vegas segment and inclement winter weather in our Regional segment,” stated Chief Operating Officer Anthony Carano.

Second, investors may be reading between the lines when it comes to speculation for CZR stock. While Icahn stated that he had no plans for activism, it’s difficult to escape his reputation. The investor made a name for himself — and quite a few enemies — for his shareholder advocacy, to put it politely.

With that in mind, it’s possible that CZR stock could be a target for a short squeeze down the line. According to Fintel, CZR’s short interest comes in at 8.02% of its float, while its short interest ratio lands at 5.25 days to cover.

To be clear, neither stat would be considered extremely pessimistic. However, CZR’s short interest has been steadily climbing. The latest news involving Carl Icahn will likely add fuel to the fire.

On the date of publication, Josh Enomoto 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 Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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