Casino operator MGM Resorts (NYSE: MGM)
stock has fared much better than its U.S. peer with a 37.8% year-to-date (YTD) performance compared to double-digit declines in shares of Las Vegas Sands (NYSE: LVS)
and Wynn Resorts (NASDAQ: WYNN)
. Shares have even outperformed the S&P 500 index (NYSEARCA: SPY)
as it continues to trade within inches of its all-time highs. The Company is seeing a rebound in the traffic and convention business in Las Vegas and bolstering its footprint in Macau
. As COVID vaccinations accelerate, the reopening
momentum should continue the recover despite the spread of the Covid-19 Delta variant
. Prudent investors seeking exposure in a better performing casino rebound
and iGaming play can watch shares of MGM Resorts for opportunistic pullbacks.
Q2 FY 2021 Earnings Release
On Aug. 4, 2021, MGM reported its Q2 2021 earnings for the quarter ended in June 2021. The Company reported an earnings-per-share loss of (-$0.13) beating consensus analyst estimates for a loss of (-$0.37), a $0.24 beat. Revenues rose 682.6% year-over-year (YoY) to $2.27 billion beating consensus analyst expectations of $2.17 billion. The Company still has $2.7 billion remaining on the current buyback authorization. The Company ended the quarter with $5.6 billion in cash and cash equivalents. MGM Resorts CEO Bill Hornbuckle stated, "We delivered a strong second quarter, driven by robust demand and productivity efforts across our domestic portfolio. Our Las Vegas Strip and Regional Operations Adjusted Property EBITDAR margins reached all-time records and our Regional Operations also delivered an all-time quarterly record in Adjusted Property EBITDAR. Our U.S. sports betting and iGaming venture, BetMGM, continues to outperform as the number two operator nationwide. We also recently announced several strategic transactions that furthered our goal of becoming a more streamlined, focused organization with stronger liquidity. We continued to advance that goal today with our announced agreement with VICI and MGM Growth Properties (MGP) to monetize our MGP Operating Partnership units for $4.4 billion in cash. I'm grateful for the tremendous work that our MGM Resorts teams continue to put into positioning this Company for future growth and success."
Conference Call Takeaways
CEO Hornbuckle set the tone, “BetMGM remains a clear leader in iGaming having reached a 30% market share in the second quarter and we also continue to see the benefits of customer acquisition, cross-pollination between MGM and BetMGM. In the second quarter, 15% of BetMGM's new players came from MGM and 31% of MGM live sign-ups came from BetMGM. We will strategically invest in our digital capabilities and customer growth strategies, driving innovation and deeper customer loyalty through technology-led customer-centric experiences, products, and services. These efforts will be led by Tilak Mandadi, who we recently hired as our Chief Strategy Innovation and Technology Officer. Tilak is a visionary, a results-driven leader, who has spent several decades of experience at both Disney and American Express, where he led similar initiatives. Tilak will also be leading our relationship with BetMGM joining its Board of Directors. He is another fantastic addition to our senior leadership team and complementary to the deep bench we've now built with recent additions of Jonathan, the CFO and Jyoti Chopra, as our Chief People, Inclusion and Sustainability Officer, excuse me. I have no doubt that Tilak will be invaluable to the company's future.” He continued, “We will also increase our diversification into Asia through the footprint expansion in Macau and the integrated resort opportunity in Japan. As a matter of fact, we officially submitted our RFP as a sole bidder for the Osaka license, a couple of weeks ago, which starts the clock on a three-month review process.” CEO Hornbuckle concluded, “And finally on Macau, in the second quarter, we delivered sequential improvements over the first and made a choppy GGR environment that remains well below pre-pandemic levels. Despite this, MGM China, given our strength in premium mass, continued to outperform our former position in the marketplace. We believe the rate of Macau's recovery will continue to hinge on broader sentiment, as we pace the rollout of the vaccinations throughout the regions, which will ultimately lead to a sustainable easing of travel restrictions. With the Guangdong outbreak quickly contained, July was off to a better start and we saw visitation and business volumes striking a pickup again. And while the region had felt some additional speed bumps in recent days with the government's expeditious efforts to contain the outbreak and border restrictions easing over time, we expect gradual growth demand for travel to Macau throughout the end of the second half of the year.”
MGM Price Trajectories
Using the rifle charts on the weekly and daily times frames enable a precision view on the price action for MGM stock. The weekly rifle chart has sold off from $45.34 highs to the $35.77Fibonacci (fib) level lows. The weekly market structure low (MSL) buy triggered on a breakout above $39.23. Shares rebound quickly as they surged through the weekly 5-period moving average (MA) at $39.89 through the weekly 15-period MA at $40.95 towards the weekly upper Bollinger Bands (BBs) at $45.76. The weekly stochastic just started to cross up through the 40-band. The daily rifle chart breakout has a riding 5-period MA at $41.57 with a laggard rising 15-period MA at $40.03. The daily stochastic crossed up towards the 90-band as shares rallied for six consecutive days. Prudent investors should be careful not to chase and instead wait for can wait for opportunistic pullback levels at the $41.57 daily 5-period MA, $40.83 level, $39.90 fib, $37.56 fib, $36.65, and the $35.77 fib. Upside trajectories range from the $45.34 fib to the $55.06 fib level.
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