MGM Could Post Q4 Loss as Chinese Lockdowns Hampered Casino Business

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).

Source: Visible Alpha