N※N

Stocks and Investing
Source : (remove) : TVNewsCheck
^{RSS • JSON • XML • CSV}

Stocks and Investing
Source : (remove) : TVNewsCheck
^{RSS • JSON • XML • CSV}

How Will MGM Stock React To Its Upcoming Earnings?

How Will MGM Stock React To Its Upcoming Earnings?

As MGM Resorts International gears up to release its second-quarter earnings report on July 31, 2025, investors are closely watching how the casino and hospitality giant's stock might respond. MGM, a powerhouse in the global gaming industry with iconic properties like the Bellagio and MGM Grand in Las Vegas, as well as significant operations in Macau and a growing presence in online sports betting, has been navigating a complex landscape shaped by post-pandemic recovery, economic uncertainties, and shifting consumer behaviors. The stock, trading under the ticker MGM on the New York Stock Exchange, has seen volatile performance over the past year, oscillating between highs driven by tourism rebounds and lows from inflationary pressures and regulatory hurdles. With shares currently hovering around $45, down about 10% year-to-date but up 15% from their 52-week low, the upcoming earnings could be a pivotal moment that either reignites bullish sentiment or exacerbates concerns.

To understand potential stock reactions, it's essential to delve into the expectations surrounding MGM's financials. Analysts polled by FactSet are forecasting quarterly revenue of approximately $4.2 billion, marking a 5% increase from the same period last year. This growth is anticipated to be fueled primarily by robust performance in MGM's Las Vegas Strip resorts, where occupancy rates have climbed back to pre-COVID levels, averaging around 95% in recent months. The company's earnings per share (EPS) are projected at $0.65, a slight uptick from the prior quarter's $0.62, reflecting improved operational efficiencies and cost controls. However, these figures come with caveats: any deviation could swing the stock significantly, as historical data shows MGM shares have moved an average of 8% in either direction on earnings days over the past five quarters.

One of the key drivers for MGM's earnings will be its Las Vegas operations, which account for roughly 60% of total revenue. The city has experienced a tourism boom, with visitor numbers surpassing 40 million annually, boosted by major events like the Formula 1 Grand Prix and high-profile concerts at venues like the Sphere. MGM's portfolio benefits immensely from this, with room rates averaging $250 per night and gaming revenues showing double-digit growth. Yet, challenges loom. Rising labor costs, following recent union negotiations that increased wages by 10%, could squeeze margins. Additionally, inflationary pressures on food, beverage, and maintenance expenses might offset some gains. If MGM reports stronger-than-expected Las Vegas results, perhaps driven by higher-than-anticipated convention bookings or slot machine yields, the stock could surge, potentially testing resistance levels at $50. Conversely, any signs of softening demand—such as lower high-roller spending amid economic slowdowns—might trigger a sell-off, pushing shares toward $40.

Shifting focus overseas, MGM's Macau segment remains a wildcard. The Chinese territory, where MGM operates through its MGM China subsidiary, has been rebounding from stringent COVID-19 lockdowns, but geopolitical tensions and a crackdown on high-stakes gambling have tempered optimism. Revenue from Macau is expected to contribute about $900 million this quarter, up 20% year-over-year, thanks to relaxed travel restrictions and a resurgence in VIP gaming. However, average daily revenues per table have not fully recovered to 2019 peaks, sitting at around $15,000 compared to $20,000 pre-pandemic. Analysts are particularly attentive to MGM's market share in Macau, which stands at about 12%, trailing competitors like Wynn Resorts and Sands China. Positive surprises, such as increased mass-market gaming or successful expansions like the MGM Cotai resort's new amenities, could bolster investor confidence and lift the stock. On the flip side, any regulatory setbacks—such as renewed anti-corruption measures from Beijing—could amplify downside risks, leading to a 5-10% drop in share price post-earnings.

Another critical area is MGM's digital and sports betting ventures, primarily through its BetMGM joint venture with Entain. This segment has been a growth engine, with online wagering exploding in the U.S. following widespread legalization. BetMGM reported $2 billion in net revenue last year and is projected to add $550 million this quarter, driven by expansions into new states like North Carolina and increased market penetration in established ones like New Jersey and Michigan. The platform's user base has grown to over 10 million active bettors, with average revenue per user climbing 15% due to enhanced app features and promotional strategies. However, competition is fierce from rivals like DraftKings and FanDuel, and MGM has faced margin pressures from high customer acquisition costs, which averaged $200 per new user in Q1. If earnings reveal accelerated profitability in BetMGM—perhaps through cost synergies or partnerships like the one with Marriott for integrated rewards programs—the stock could see a positive reaction, potentially adding 3-5% in value. But if losses widen or market share erodes, it might fuel bearish narratives, dragging the stock lower.

From a valuation perspective, MGM trades at a forward price-to-earnings (P/E) ratio of about 18, which is in line with industry peers but below its historical average of 22. This suggests room for upside if earnings beat estimates, especially given the company's strong balance sheet, with debt reduced by 15% over the past year through asset sales and operational cash flows. Free cash flow is expected to reach $1.2 billion for the full year, supporting dividends and share buybacks. Technical indicators also point to potential volatility: the stock's relative strength index (RSI) is at 55, indicating neutral momentum, while moving averages show a bullish crossover. Options trading volumes have spiked ahead of earnings, with implied volatility at 40%, suggesting traders anticipate a significant move.

Historically, MGM's stock reactions to earnings have been mixed. In Q1 2025, shares jumped 7% after beating revenue expectations by 3%, driven by a Las Vegas surge. But in Q4 2024, a miss on Macau figures led to a 9% decline. This pattern underscores the importance of guidance: if MGM provides optimistic forward-looking statements, such as projections for 10% revenue growth in 2026 tied to new developments like the Osaka integrated resort in Japan, it could catalyze a rally. Conversely, cautious commentary on economic headwinds or consumer spending could spark profit-taking.

Broader market dynamics will also influence reactions. With the S&P 500 up 12% year-to-date amid hopes of Federal Reserve rate cuts, a positive earnings surprise could align MGM with the broader rally in consumer discretionary stocks. However, if inflation data released concurrently shows persistence, it might overshadow company-specific news, leading to sector-wide pressure. Geopolitical risks, including U.S.-China relations affecting Macau, add another layer of uncertainty.

In terms of risks, MGM faces ongoing challenges from cybersecurity threats—recall the 2023 hack that disrupted operations—and potential recessions that could curb discretionary travel spending. Opportunities abound, though, with expansions into emerging markets and digital innovations. For instance, MGM's foray into non-gaming amenities, like esports arenas and luxury spas, is diversifying revenue streams, potentially reducing reliance on volatile gaming income.

Looking ahead, the consensus among Wall Street analysts is a "Buy" rating, with an average price target of $55, implying 22% upside. Firms like J.P. Morgan and Deutsche Bank have highlighted MGM's resilient business model and growth potential in a normalizing travel environment. However, contrarian views from bears point to overvaluation if growth slows.

Ultimately, the stock's reaction will hinge on whether MGM delivers on expectations across its diverse segments. A beat-and-raise scenario could propel shares toward new highs, rewarding long-term holders. A miss, however, might lead to short-term pain but could present buying opportunities for value investors. As earnings day approaches, traders should monitor pre-market indicators and conference call nuances for clues. In the high-stakes world of casino stocks, MGM's report could be the ace up the sleeve—or a bust. Investors would do well to hedge their bets accordingly.

(Word count: 1,048)

Read the Full Forbes Article at:
[ https://www.forbes.com/sites/greatspeculations/2025/07/29/how-will-mgm-stock-react-to-its-upcoming-earnings/ ]