- MGM was profitable in post-pandemic reopening as LVS, and WYNN is still bleeding
- BetMGM will be in the dark in 2023
- Macau will be open to Chinese tour groups by November
- Mainland travelers account for up to 90% of total spending in Macau
- While WYNN and LVS have the most to gain from Macau, MGM still has a 10% market share.
casino operator MGM Resorts (NYSE: MGM) was profitable during the post-pandemic recovery, far better than major casino rivals Las Vegas Sands (NYSE: LVS), Wynn Resorts (NASDAQ: WYNN), Melco (NASDAQ: MLCO). Ironically, its shares are down (-25%) lagging Las Vegas Sands shares which are trading up 10% on the year. Las Vegas is back and MGM is enjoying the recovery while being the least exposed to COVID Closures in Macau like its competitors Wynn and Las Vegas Sands. Las Vegas hotel occupancy rates returned to 90% as the company was only able to fill about 2,000 of the 5,000 vacancies it had. Its mobile and online sports betting and video game app BetMGM continues to gain market share from rivals such as DraftKings (NASDAQ: DKNG) and Penn Entertainment (NASDAQ: PENN). BetMGM has partnered with NBC Sports (NASDAQ: CMCSA) for Sunday Night Football where it will be featured throughout the show highlighting betting stories and odds. Ultimately, that leaves more upside in MGM stock.
Macau lift restrictions push casino stocks higher
China has signaled the reopening of Macau to tour groups from its zero-tolerance COVID-19 policy. Regulators have signaled the resumption of mainland tour groups and the issuance of IVS eVisas to Macau aimed at boosting the island’s economy. Macau derives almost 90% of its revenue from the mainland’s 27.9 million travelers and the easing of restrictions is expected to be in place by November. Casino stocks with a heavy concentration in Macau have soared over the past two weeks, pushing LVS shares well into the green. MGM still has a 10% market share and derives 7% of its total revenue from Macau, so a recovery bodes well for MGM as well.
Vegas is back, baby
On August 3, 2022, MGM announced its second quarter 2022 results for the quarter ended June 2022. The company reported earnings per share of $0.03 missing analyst consensus estimates for earnings of $0.33, one (-$0.30) miss. Revenue rose 44% year-over-year (YoY) to $3.26 billion, beating analyst estimates of $3.03 billion. Consolidated Adjusted EBITDAR of $920 million and Consolidated Adjusted EBITDAR margin of 28.2% in the current quarter. The company acquired The Cosmopolitan of Las Vegas and sold the operations of Gold Strike Tunica for $450 million. Same-store sales increased nearly 60% year-on-year. The Company repurchased $1.1 billion of common shares or 8% of outstanding shares. MGM is pursuing gaming licenses in New York and developing an integrated resort in Osaka, Japan.
Here’s what the charts say
Using rifle charts on the weekly and daily timeframes allows for an accurate view of the price movement of MGM shares. The weekly Rifles chart formed an inverse PUP breakdown after rejecting $44.31 Fibonacci level (fib) to fall and descend near the $26.64 fib. The weekly Rifle chart is following a decisive pattern with a flat weekly 5-period moving average (MA) at $32.34 and a weekly 15-period MA at $32.36. The 200-period weekly MA is $31.55. The weekly stochastic decline stopped at the 60 band for a mini reverse pup or cross backup. The weekly weak market structure (MSL) the buy trigger is support at the $31.83 level. The lower weekly Bollinger Bands (BB) lie at $26.17 and the upper BB straddles the weekly 50-period MA at the $38.51 fib. The daily Rifles chart is attempting a breakout with the rising 5-period MA at $32.06 crossing the 15-period MA at $31.77. The daily Stochastic has bounced back into the 50 band. The daily 50-period MA is tested at $33.45. The daily 200-period MA falls to $37.31 below the daily upper BBs at $37.78. Attractive pullback levels lie at the $30.70, $29.64 fib, $27.99 fib, $26.64 fib, $25.51 and $24.53 fib level.
CEO’s upbeat comments
MGM CEO Bill Hornbuckle said, “Our second quarter results were exceptional, representing the best adjusted real estate EBITDAR quarter ever at the company’s Las Vegas Strip resorts and the best EBITDAR second quarter adjusted real estate in our regional operations, driven by continued strong demand from leisure consumers and a return from our convention customers… We look to the future with optimism as our calendar of conventions and events for the next year remains particularly strong and BetMGM continues to be a market leader with a roadmap for growth. to be the world’s leading gaming entertainment company.”
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