Stock Prices for Light & Wonder Decline due to Tariff Issues
Posted on: May 8, 2025, 12:44h.Last updated on: May 8, 2025, 01:53h.
Todd Shriber @etfgodfather Check Out Gaming & Finance Mergers & Acquisitions Slot machine manufacturer reeling from trade tensions and cost pressures
Company attempting damage control with price negotiations and diversifying supply chain
Shares of Light & Wonder (NASDAQ: LNW) took a nose dive Thursday afternoon after the slot machine manufacturer warned about the effects of American tariffs.
By the closing bell, the stock had dropped a staggering 12.70% on heavier-than-usual trading following the company's announcement that US tariffs could result in increased production costs. Light & Wonder imports components from countries like China and other Asian nations that have been targeted by the Trump Administration's trade levies.
While we anticipate that recent tariffs and trade policies will generate incremental cost pressures for a while, our continuous operational efficiency initiatives coupled with other strategies should help alleviate these impacts," said a statement from the company.
Still confident in its projected performance, Light & Wonder kept its 2025 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) outlook of $1.4 billion, but did not factor in potential benefits from the charitable gaming assets it's buying from Grover Gaming, Inc. and G2 Gaming, Inc. for $850 million.
Light & Wonder Facing Mounting Pressures
Since "Liberation Day" - President Trump's plan to slap tariffs on multiple trading partners - the gaming industry has experienced varying consequences. Land-based casinos operators worry a trade war prolongation could lead to a recession, reducing consumer interest. Sportsbook ventures face similar apprehensions.
Slot machine and gaming device manufacturers, in contrast, are vulnerable due to their dependence on global supply chains. The assembly process varies by company, but most machines are finalized and prepared for use stateside. Despite this, the industry remains heavily reliant on certain Asian nations, many of which have been targeted, for sourcing components.
In this evolving landscape, Light & Wonder is taking steps to safeguard its supply chain, such as supplier negotiations and cost controls, in addition to diversifying its sourcing.
"In terms of our supply chain and the uncertainty regarding tariff placement, it's crucial to acknowledge that we're a global company operating across various product lines and business models, which are affected to varying degrees by policy changes," said CFO Oliver Chow during a conference call on Thursday.
"For the applicable parts of our business, we're roughly on par with the industry regarding the extent of the impact," Chow added.
CPAC and China: What Next?
On Thursday, the White House announced a new trade agreement with the UK, hinting that Trump could forge compromise with trading partners. Some Southeast Asian nations, including possible slot machine parts suppliers, are also reportedly eager to speak with the White House in hopes of easing trade tensions.
However, China poses a significant challenge.
Tensions between the world's two largest economies, the US and China, remain unresolved, and it's believed the two countries haven't engaged in talks concerning trade since early 2025. Light & Wonder has contingency plans in place, like USMCA agreements and onshore production, should the U.S.-China situation worsen.
Fortune favors the bold, and it seems this adage is especially true for the gaming industry as it braces for another round of tariff battles.
- With Light & Wonder's stock dropping due to US tariffs and trade pressures, investors are wondering about the company's mitigation strategies.
- In the face of mounting pressures from tariffs and trade policies, Light & Wonder remains confident in its 2025 projected performance.
- Technology and finance industries are key in Light & Wonder's efforts to safeguard its supply chain and alleviate the impacts of tariffs.
- The gaming industry is vulnerable to tariffs due to its dependence on global supply chains, particularly in Asia, which have been targeted by the trade levies.
- As the White House announces new trade agreements and Southeast Asian nations express eagerness to ease trade tensions, the future of US-China relations remains a significant challenge for businesses like Light & Wonder.
