MGM Could Post Q4 Loss as Chinese Lockdowns Hampered Casino Business

Las Vegas tourism has rebounded, but challenges remain for casinos in Asia

Entrance of the MGM Grand Las Vegas Hotel & Casino
Busà Photography / Getty Images

Key Takeaways

  • MGM Resorts International is expected to report adjusted losses per share for the fourth quarter of $1.09, swinging from adjusted EPS of 28 cents in the prior-year quarter.
  • MGM Resorts' revenue in the latest quarter could increase 10% to $3.4 billion.
  • Rebounding Las Vegas travel and an increase in online-betting legalization in the U.S. helped earnings in recent months.
  • MGM still faces challenges in China, as COVID restrictions remained in place through most of 2022 and Macau has cracked down on casino operators.

MGM Resorts International (MGM), the second-largest gambling company in the U.S. by market value, likely posted a second straight quarterly net loss for the fourth quarter, during which time most of China's stringent COVID restrictions remained in place, even as the U.S. casino industry surged.

Analyst estimates compiled by Visible Alpha place MGM's fourth-quarter net loss at $533.6 million, for adjusted losses per share of $1.09. By contrast, the company reported net income of $116.1 million and adjusted earnings per share (EPS) of 28 cents for the prior-year quarter. Revenue is predicted to climb by 10% to $3.4 billion. The company reports results after markets close on Wednesday.

MGM suffered early in the pandemic as COVID lockdowns hampered leisure travel, but Las Vegas tourism rebounded in 2022. An estimated 38.8 million people visited the city last year, 20% more than in 2021, though shy of 2019's 42.5 million visitors. MGM also has benefited from an increase in the number of U.S. states legalizing online betting, which contributed to more than $1 billion in revenue for the BetMGM mobile app in the first nine months of 2022.

Despite these positive factors, MGM's final-quarter results likely will reflect the lingering lockdown requirements that have largely shuttered operations in China. The company also reeled in recent months from tightened oversight of casino operators in Asian gambling hub Macau, including minimum revenue thresholds. Macau's gambling revenue was six times that of Las Vegas prior to the pandemic. China began to ease COVID restrictions in the final weeks of 2022.

MGM shares have rallied in recent weeks and are down 3% in the last year, compared with a 16% drop for the S&P 500 Consumer Discretionary Index (see chart below).

One-Year Total Return for S&P 500 Consumer Discretionary Index and MGM
Source: TradingView.
MGM Key Stats
  Estimate for Q4 FY 2022 Actual for Q4 FY 2021 Actual for Q4 FY 2020
Adjusted Earnings Per Share ($) -1.09 0.28 -0.91
Revenue ($B) 3.4 3.1 1.5

Source: Visible Alpha

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

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  5. Las Vegas Convention and Visitors Authority. "LCVCA Executive Summary, December 2022."

  6. MGM Resorts International. "Third Quarter 2022 Earnings Presentation." Page 8.

  7. Nasdaq. "MGM Resorts Actually Gained 15.8% in the Second Half of 2022. Is the Worst Over?"

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

  9. Bloomberg. "Macau Casino Crash Shifts World’s Gambling Crown to Las Vegas."

  10. Reuters. "Beijing Drops COVID Testing Burden as Wider Easing Beckons."

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