Headquartered in Paradise, Nevada, US, MGM Resorts International is a company that believes it exists to ‘entertain the human race.’ The company owns and operates casino resorts that offer gaming, hotel, dining, conventions, entertainment, and other resort amenities. The company has its roots on the Las Vegas strip, a market where it controls over 35,000 guest rooms and suites.
The company was founded by Kirk Kerkorian in 1986 and it offers its products and services via 3 broad business segments: Las Vegas Strip Resorts, Regional Operations, and MGM China. Some of MGM’s popular resorts include the Bellagio, Mandalay Bay, Monte Carlo, MGM Grand Las Vegas, Circus Circus Las Vegas, The Mirage, Beau Rivage, and MGM Macau.
The company was founded as MGM Grand, Inc. but it changed its name to MGM Mirage in 2000 following the acquisition of Mirage Resorts that year. MGM was a predominantly gambling company, but in the mid-2000s, non-gambling operations started generating more revenue than its core gambling activities. This triggered a shift in strategy from owning and operating casino resorts to developing leisure and gambling properties. The company then acquired its current name, MGM Resorts International, in 2010, highlighting its global status and focus on non-gaming operations. Over the years, MGM has been a conservative but strategic M&A player, with its biggest deal to date being the acquisition of Mandalay Resort Group for $7.9 billion in 2005.
The company continued to drive the growth of its bottom line throughout the 2010s, but like other casino and hospitality players, it was hit hard during the 2020 Great Lockdown triggered by the global coronavirus pandemic. Nonetheless, the pandemic proved a blessing in disguise for the company as it grew its sports betting and online gambling app, BetMGM, to become the biggest iGaming app in the industry with a market share of 30% as of October 2021.
MGM Resorts International is listed on the NYSE, where it trades under the ticker symbol MGM. The stock is categorized in the Consumer Cyclical sector, under the Resorts & Casinos industry.
MGM Stock History
MGM has had two stock splits in its history, with the latest one being a 2-for-1 implemented in May 2005. MGM stock was literally a rock star at the turn of the millennium.
The stock traded at circa $10 in January 2000, but it sustained a multi-year rally that drove it to its all-time high of just below $100 in early October 2007. The 2008 Great Recession then exposed the vulnerabilities of the company, which had, by that time, started implementing high capital real estate projects. This negative fundamental environment saw the MGM stock plunge to lows of below $2 by March 2009. The stock then, however, recovered slowly and by early 2020, it has settled firmly above the $30-price handle. However, the coronavirus pandemic again pressured the stock to lows of below $10 by March 2020. The post-pandemic stock market recovery then saw the stock rise above $40 as of October 2021 – a price it had never hit since 2008.
MGM Resorts International is a willing dividend payer, but the cyclical nature of its business has seen the company adjust its payouts according to its performance in the market.
How to Trade MGM Stock
Here are some of the factors to consider when trading MGM stock:
- Legislative and Taxation Issues
MGM faces many legal challenges due to the nature of its business. Gambling and gaming are subject to different rules, regulations, restrictions, and operational requirements in different jurisdictions. Even in the US, laws and regulations can change from state to state. As well, taxation changes from jurisdiction to jurisdiction, with gaming licenses and fees always subject to discussion and adjustments regularly.
- New Product Rollout
MGM boasts a wide range of offerings, but the pandemic proved that without innovation, its bottom line can suffer immensely. While it has had success with its BetMGM app, the company still faces various threats to its core leisure and gaming industry. MGM still operates in the broader hotel industry that is vulnerable to digital and offline disruption. Consumers are increasingly considering new destinations that were previously not frequented, while technology also opens up the space for other digital disruptors. MGM will have to stay on top of its game so as to continually offer more enticing entertainment products for the modern, daring consumer.
MGM operates in a highly competitive environment, with competition coming from fellow entertainment companies as well as other players in the broader travel and tourism space. Some of the company’s biggest competitors include Caesars Entertainment, Las Vegas Sands, Marriot International, Wynn Resorts, and Diamond Resorts. Competition also comes from local gaming operations and leisure destinations in different jurisdictions.
- Periodic Earnings Reports
MGM’s fiscal year runs from January to December. The company releases quarterly and annual reports to keep investors updated on its performance in the market. Some of the key metrics to watch out for in MGM earnings reports include revenues, earnings per share, and room occupancy rates. Better than expected numbers can inspire higher stock prices, whereas worse than expected figures could trigger lower stock prices.
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