MGM Resorts: Losing In One Market, Winning In Others

MGM Resorts reported mixed Q3 results: weakness in its Las Vegas Strip operations—attributed in part to MGM Grand renovations and broader strip softness—contrasts with a strong Macau performance where the company is taking share amid robust industry growth. Its BetMGM stake is highlighted as increasingly valuable as the U.S. online-gaming market matures, with BetMGM scaling margins and maintaining iGaming share, supporting MGM’s earnings momentum. An analyst models about 27% upside to $39.80, implying the market may be underpricing Macau and BetMGM growth while the timing of a Strip recovery remains a key risk.

Analysis

MGM reported mixed Q3 results with a clear business split: Las Vegas Strip results were weak, attributed in part to the MGM Grand renovation and broader softness on the Strip, while the Macau segment delivered strong performance and gained market share amid robust industry growth. The article emphasizes that Macau's outperformance is a material driver of the company's near-term revenue and profit mix. MGM's equity stake in BetMGM is presented as increasingly valuable as the U.S. online-gaming market matures; BetMGM is described as growing, scaling margins and maintaining a stable iGaming share, which supports MGM's earnings momentum. An analyst models a 27% upside to a $39.80 target, implying the market may be underpricing Macau and BetMGM contributions, but the note flags the timing of a Strip recovery as the primary near-term risk, and discloses the analyst holds no positions in the referenced securities.

Key Decisions for Investors

• Consider initiating or modestly increasing exposure to MGM to capture the analyst-identified 27% upside to $39.80, while sizing positions to reflect concentration in Macau and BetMGM drivers
• Monitor three leading indicators—Macau revenue and market-share trends, BetMGM iGaming market share and margin expansion, and MGM Grand renovation/timing for Strip recovery—and reduce exposure if these metrics deteriorate
• Use position sizing or protective hedges to limit downside from a delayed Las Vegas Strip recovery, given that Strip weakness is the principal short-term risk to the bullish thesis