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Why Everi Holdings Stock Popped 25.5% in May

The Motley Fool logo The Motley Fool 6/8/2020 Travis Hoium
a close up of a screen: Why Everi Holdings Stock Popped 25.5% in May © Provided by The Motley Fool Why Everi Holdings Stock Popped 25.5% in May

What happened 

Shares of Everi Holdings (NYSE: EVRI) jumped 25.5% in May, according to data provided by S&P Global Market Intelligence. Investors speculated that its business, making slot machines and providing financial equipment and services to casinos, is going to see a boom when betting parlors open up again. Shares haven't stopped in June, either, rising another 26.7% so far this month. 

So what 

The biggest tangible news item from Everi Holdings in May was a number of insiders buying shares. That can be a bullish sign for a company because insiders know more about the operations of a business than public shareholders do, but even that's speculating on the future. 

a close up of a logo: Roulette wheel with a black background. © Getty Images Roulette wheel with a black background.

Investors were also bidding up gambling stocks in anticipation of casinos opening, which some started to do in May. We don't know what demand will look like in coming months, but doors simply being open should be good for suppliers like Everi that are downstream from the casino's operations. 

Now what 

Everi's move looks a lot like a momentum play by traders when you see the wild swings in shares with very little news. Investors should also keep in mind that investment in new games and technology at existing casinos may be suppressed for the next few quarters as casino companies learn how much business they'll have.

Given the uncertainty, this isn't a potential growth stock that I'm buying, but investors should watch earnings over the next few quarters to see what management was seeing when it bought shares last month. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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