MGM Resorts (MGM) surpassed fourth quarter estimates after closing on Wednesday, and the casino giant predicted that its online gambling app will more than double revenue this year. MGM’s shares fell.
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MGM Resorts earnings report
Estimates: Analysts expect a loss of 96 cents per share vs. EPS of 8 cents over the past year, as revenue drops 54% to $ 1.47 billion, according to Zacks Investment Research.
Results: Loss of 90 cents per share on revenue of US $ 1.49 billion. Vegas Strip revenue fell 66% to $ 480 million, with a lack of conventions forcing it to close midweek. Regional revenue fell 34% to $ 595 million. China’s revenue fell 58% to $ 305 million.
MGM Resorts, which owns half the casinos on the Las Vegas Strip, was hit hard by the pandemic. Las Vegas casinos were closed for many months last year, closing conventions and keeping visitors at bay. Since then, casinos have reopened with limited capacity, and the launch of the vaccine has raised hopes of a return to normal.
Meanwhile, MGM Resorts has turned its focus to online gambling. Solidified its partnership with Entain (GMVHY) with a second round of investment in the sports betting app BetMGM in July. The app aired in Nevada in March 2020 and in Michigan on January 22.
Net revenue in 2020 associated with BetMGM totaled $ 178 million, above the company’s forecast for $ 150 million – $ 160 million, while operating losses were $ 62 million, which were shared with its partner JV.
BeMGM expects 2021 revenue to “grow well over 100%” compared to 2020, and last month alone saw $ 44 million. The app has a 17% market share, with 25% in New Jersey and about a third in Tennessee and Colorado. The company expects it to be in 20 markets by the end of the year.
The joint venture started in 2018, but MGM Resorts made a $ 11 billion takeover offer by Entain on January 3. Entain rejected the cash offer, saying it was too low. On January 28, BetMGM struck a sports betting deal with sports media company The Athletic.
BetMGM also includes more than 100 game kiosks on MGM’s Las Vegas properties. It now operates in eight states. One of those states, Colorado, was among a handful of states that, in the last election cycle, passed laws that allow gambling. BetMGM also operates in New Jersey, Pennsylvania, Indiana, Tennessee, West Virginia and Iowa.
Super Bowl LV raised almost $ 500 million in total bets, and BetMGM was among the top online platforms that accept bets. However, BetMGM and other applications experienced disruptions before and during the game, which highlighted the increase in online betting and the lack of readiness between platforms.
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MGM Stock
The shares fell 1.6% late, after closing 1.8% at 36.47 on the stock market today. MGM’s shares surpassed a buying point of 23.57 from a double-bottomed base on November 9, then reached the 20% to 25% profit-taking zone on November 27 and continued to rise. MGM’s stock jumped above its 50-day line on February 1, and the stock has skyrocketed ever since, peaking in 52 weeks.
Its relative strength line, which measures performance against the S&P 500, has recovered from pandemic lows and is trending upwards, shows the analysis of the MarketSmith chart. MGM’s shares have an RS rating of 81 out of the 99 best possible.
Rival casino operators Penn National Gaming (PENN) fell 2.8%, Bally’s (BALY) rose 1% and Caesars Entertainment (CZR) lost 2.4%. Sports betting specialist DraftKings (DKNG) added 0.9%.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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