MGM Posts Surprise Loss as Macau Gaming Laws Change

MGM missed on profit expectations, beat on revenue

By
Nathan Reiff
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Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
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Published November 02, 2022
MGM casino in Las Vegas outside view

George Rose / Getty Images 

Key Takeaways

  • MGM Resorts International posted an unexpected loss due to new Macau gaming laws, among other factors.
  • MGM shares dropped about 6% following the earnings news in after-market trade.
  • MGM's revenue and Las Vegas room occupancy rate came in above analysts' expectations.
  • Las Vegas is MGM's biggest market, and the room occupancy rate provides a measure of the total number of available rooms that are filled with paying guests.
MGM Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted Earnings Per Share Miss -$1.39 $0.22
Revenue Beat $3.4B $3.2B
Las Vegas Room Occupancy Beat 93.0% 91.4%

Source: Predictions based on analysts' consensus from Visible Alpha

MGM Financial Results: Analysis

MGM Resorts International (MGM), the fifth-biggest U.S. gambling company by market value, posted an unexpected third-quarter loss after the casino mecca of Macau tightened oversight over operators in the former Portuguese colony.

MGM lost $1.39 per share, compared with a consensus estimate of a 22-cent profit. Revenue rose 26% to $3.4 billion, topping predictions.

Casinos in the U.S. have rebounded in recent months after COVID-related shutdowns, reflecting pent-up demand as Macau suffers from pandemic restrictions. In August, Macau approved new rules that allow casino operators to be punished for underperforming revenue, among other things, while stipulating that the duration of new licenses will be cut by half to 10 years. U.S. casino gambling rose to a record in the second quarter, driven by a return to leisure travel and gains in convention business.

MGM Las Vegas Room Occupancy Rate

MGM's room occupancy rate for Las Vegas, which shows the number of rooms occupied by paying guests in the firm's biggest market, increased to 93% for Q3, beating analyst predictions. It was the highest occupancy rate in more than three years.

MGM Outlook and Stock Performance

MGM didn't provide an outlook. It said developments in New York and Japan and strong bookings in domestic operations through 2023 are promising.

Shares of fell about 5% after the earnings report. MGM stock has dropped by 27% in the last year, compared with a decline of 19% for the S&P 500 Index.

MGM's next earnings report (for Q4 FY 2022) is expected to be released on Feb. 15, 2023.

Article Sources
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  1. Visible Alpha. "Financial Data."

  2. Statista. "Largest Gambling Companies by Market Cap."

  3. Bloomberg. "Macau Clears Doubt for Covid-Hit Casinos With Revenue Threshold."

  4. The Wall Street Journal. "Go Big in Vegas—Stocks, That Is."

  5. Zacks. "MGM Resorts (MGM) to Report Q3 Earnings: What's in the Cards?"

  6. MGM Resorts International. "MGM RESORTS INTERNATIONAL REPORTS THIRD QUARTER 2022 FINANCIAL AND OPERATING RESULTS," Pages 1, 2, 3, 9.

  7. Yahoo! Finance. "MGM Resorts International (MGM)."

  8. TradingView. "Price Chart: MGM and S&P 500."

  9. MarketScreener. "MGM RESORTS INTERNATIONAL (MGM)."

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