MGM Resorts International (NYSE:MGM), one of the biggest names in the casino and entertainment world, has had a wild year on the stock market that’s seen share prices for the company plunge to dismal levels. MGM Resorts actually started 2018 off with a solid performance on the stock market, wowing investors and critics alike with a sizable jump in share prices, but the casino empire’s stock value has since plummeted to heartbreaking levels.
Should you avoid MGM Resorts stocks this summer? The casino company has come far, and not all recent news surrounding its business empire is dire, but it remains a risky investment that only the boldest of investors should consider over this summer.
MGM Resorts Is struggling
While MGM Resorts is set to open up some new casinos that could boost revenue figures for the company, it’s been having an incredibly rough year that’s seen share prices struggling to stay high. For the remainder of June, investors should expect little positive movement from MGM Resorts stock, which is dipping into annual-low territory and unlikely to make a speedy recovery. Recent announcements from the government, however, including the legalization of sports betting, could serve to offer MGM Resorts an appealing way out of its current, dire straits.
MGM Resorts owns nearly half of all resorts on the Las Vegas Strip, an extraordinarily impressive empire that’s worth a serious chunk of change to investors. Thus, we obviously shouldn’t expect MGM to tank overnight anytime soon. MGM Resorts is truly international in scope, however, and those trying to size up its prospects in the market need to take into consideration the sizable overseas holdings and operations of MGM Resorts.
The company saw net revenue from domestic resorts pile up to $2.1 billion recently, for instance, largely thanks to its holdings in Las Vegas, Mississippi, and Michigan. The $2.1 billion in domestic revenue the company posted is actually a 1 percent decline from the same quarter last year, however, illustrating that while MGM Resorts has serious financial heft, it’s not exactly in a thriving situation. The company saw sizable declines in the amount of revenue it was deriving from rooms at its resorts, too, which could be worrying to hospitality-minded investors interested in its shares.
Not all of the news facing MGM Resorts is bad, however – indeed, the company has a slew of things to look forward to in the near-future that could help it escape its current nosedive in the market. Sports betting has recently been legalized, for instance, which will doubtlessly help MGM Resorts reap in additional revenues. The casino king could tap into the soon-to-arrive sports betting market, which some experts consider to be holding a potential $60 to $70 billion.
Down But Not Out
MGM Resorts should consider the official Supreme Court ruling that legalized sports betting to be a lifeline that could pull it out of its current situation and into better financial prospects. After all, MGM Resorts remains one of the chief architects of the Las Vegas Strip, no small title, and can easily cash in on the heyday of sports betting we’re soon to witness in Nevada. Las Vegas isn’t the only area MGM Resorts can focus its resources on, either; the company derives a sizable portion of its revenue from its casino online and overseas operations, for instance, and can also focus on other areas in the United States like Mississippi and Michigan.
In Macau, MGM Resorts draws in more than $2 billion in revenue alone. The bulk of the company’s earnings come from the cash flow heading into its coffers from its many resorts, but its ability to move into overseas market could seriously help it escape the death spiral it’s currently suffering from in Western markets. With MGM Resorts already possessing a foothold into the Asian gaming market in the form of its Macau holdings, it could easily expand its presence into nearby countries like Japan, too, in an attempt to cash in on that country’s gambling-legalization efforts.
While the near-term prospects for MGM Resorts don’t look good, and the stock could continue to suffer for the remainder of the summer, long-term investment angles for the company aren’t exactly terrible. While MGM Resorts has built an empire for itself in Las Vegas, the company could easily start churning out more money by building additional resorts and casinos overseas. The success of its operations in Macau show that there’s clearly a heavy international demand for MGM Resorts and its gambling services, though it remains unclear if the company is truly intent on going on a foreign spending spree. Keep your eye closely on MGM Resorts stocks as the rest of the summer unfolds – the near-term prospects for the casino magnate are grim, but MGM Resorts could bounce back to life with a long-term strategy that’s focused on overseas development.