Star shares sink 7% on Q2 update and 'going concern' warning

Star Entertainment Group Ltd (ASX: SGR) shares are having another tough session on Monday.

In afternoon trade, the struggling casino and resorts operator's shares are down 7% to 13 cents.

This latest decline means that the company's shares have now lost a third of their value since this time last month.

Why are Star shares falling again?

Investors have been hitting the sell button today after the company released its second quarter update.

For the three months ended 31 December, Star reported revenue of $299 million. This represents a 15% decline on what it recorded in the first quarter of FY 2025.

Management blamed this on the closure of Treasury Brisbane Casino and continued softness at The Star Sydney following the implementation of mandatory carded play and cash limits. This was partially offset by revenue growth at The Star Gold Coast

This led to Star reporting negative EBITDA of $8 million for the second quarter (excluding significant items). Though, it is worth highlighting that this was an improvement on the $18 million EBITDA loss it reported in the first quarter.

This improvement was driven by an 18% quarter on quarter reduction in operating expenses to $52 million due to lower corporate costs, reduced activity, and the closure of the Treasury Brisbane casino.

Running out of cash

At the end of the period, Star had available cash of $78 million. As previously reported, it is working hard to source additional liquidity but has yet to find support.

In light of this, the company included a grave warning in its update today, which could be putting pressure on Star shares. It warned:

Given the reduction in the Group's available cash as at 31 December 2024 and the Group's ongoing financial and liquidity challenges, the Company and its directors continue to seek external advice in respect of their duties, including the applicability of, and the ongoing reliance on, the safe harbour provisions under the Corporations Act.

As noted above, the Group continues to explore other possible liquidity solutions. While discussions continue with respect to a range of different solutions, there is no certainty that any of these negotiations will result in one or more definitive arrangements that might materially increase the Group's liquidity position. In the absence of one or more of those arrangements, there remains material uncertainty as to the Group's ability to continue as a going concern.

In light of this, it seems that the current quarter could be one of the most important in Star's history. That's if it survives the three months.

The post Star shares sink 7% on Q2 update and 'going concern' warning appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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