Casino stocks have been associated with slumping performance over the past two years, but most assets have rallied magnificently, despite facing multiple challenges on the international market. Going global has been a strong diversification strategy and a risk for some companies, but the bid has mostly paid off.
Macau to Not Put Dent on MGM Stock
MGM Resorts, which is exposed to the economic and regulatory uncertainty in Macau, seems to be weathering the storm well enough despite the special administrative region not being anywhere near pre-pandemic results and the outlook fairly dimmed.
But among the gloom, there is room for cheer. Even the most exposed stocks, such as MGM Resorts, have the potential for growth, mostly boosted by domestic growth. MGM’s overseas ties to Macau are no reason for investors to shun its stock, Jacky Wong from the Wall Street Journal reports. In fact, the company has been doing so well domestically, that its stock is most likely a buy. Besides, the long-term prospects internationally are looking equally promising.
MGM Resorts is in pole position to build the first Integrated Resort in Japan and Macau is bound to make a recovery sooner or later. Most predictions have this recovery slated for the end of 2024. Of course, uncertainty persists. MGM’s share has fallen a quarter of the value year-to-date course, which is a red flag for investors.
But then again, it also means the opportunity to buy a strong future-proof asset on the cheap. Besides, MGM has taken heed of the way the world has changed over the past year, reducing its market capitalization from Macau operations to only 8% of Bellagio’s. MGM is not only operating in the physical landscape, though, with the namesake BetMGM brand grabbing headlines as it goes along.
MGM Stock Shows Long-Term Resilience
Domestic recovery and the proliferation of legalized sports gambling (Kansas is due to launch on September 1, with mobile sports gambling arriving on September 8) have given strong signals that MGM Resorts is a good bet. BetMGM may yield its first profits in 2023. But as online sports gambling and even casinos gather space, occupancy for MGM’s properties on the Strip already exceeds 90%, meaning that MGM is a preferred leisurely venue.
With skilled diversification, a strong balance sheet, and changing priorities, investors have at least some reassurances that MGM Resorts is in an exceptionally strong position to not only continue to work towards delivering better value to shareholders, but also to absorb any future emergencies.