Why Light & Wonder (LNW) Shares Are Falling Today

What happened:

Shares of gaming products and services provider Light & Wonder (NASDAQ:LNW) fell 19% in the morning session after a US District Court (District of Nevada) granted competitor Aristocrat a preliminary injunction regarding the game Dragon Train of L&W. In this case, the preliminary injunction could prevent Light and Wonder from carrying out certain activities (which could include activities that affect monetization) related to the Dragon Train game. In particular, the company announced plans to work on new iterations of the Dragon Train franchise under the terms of the Court’s ruling.

To provide some clarity to investors on the potential impact of the decision on its business, L&W reaffirmed its adjusted EBITDA guidance of $1.4 billion for 2025. It also clarified that, prior to the ruling, Dragon Train represents less of 5% of the estimated EBITDA of USD 1.4 billion. However, Light & Wonder plans to appeal the decision, creating an air of uncertainty that the market doesn’t like.

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What the market tells us:

Light & Wonder shares are quite volatile and have had 5 moves of more than 5% in the past year. But such big moves are very rare even for Light & Wonder, and this indicates that this news had a significant impact on the market’s perception of the business.

Light & Wonder is up 12.5% ​​year-to-date, but at $91.62 a share, it still trades 18.7% below its 52-week high of $112.68 from September 2024. Investors who bought $1,000 worth of Light & Wonder stock 5 years ago would now be looking at an investment worth $3,989.

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