VALUATION HIGHLIGHTS

1. Las Vegas Non-Casino Operations (U.S. Hotels, Food & Beverage, Las Vegas Entertainment, Retail and Other) constitute 50% of the Trefis price estimate for MGM Resorts International's stock.
2. Las Vegas Casino Operations (U.S. Casinos Table Games, U.S. Slot Games) constitute 21% of the Trefis price estimate for MGM Resorts International's stock.
3. Regional Casino Operations constitute 15% of the Trefis price estimate for MGM Resorts International's stock.

WHAT HAS CHANGED?

MGM posted a better-than-expected set of Q4 2023 results. While revenue rose 22% year-over-year to $4.38 billion, adjusted earnings came in at $1.06 per share. Growth was led by the company's Las Vegas Strip Resorts and Macau business.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of MGM Resorts value that present opportunities for upside or downside to the current Trefis price estimate for MGM Resorts:

Macau Casinos

• MGM Macau Casino Revenues: MGM Macau casino revenues have increased considerably in the recent past. In 2018, revenue stood at $2.32 billion, primarily due to robust growth in both VIP and Mass markets driven by MGM Cotai, slightly dampened by a below-average performance at MGM Macau. After observing a slight improvement in 2019, the metric declined sharply in 2020 and 2021 due to the pandemic although it recovered strongly over 2023. We expect MGM's Macau casino revenues to increase to over $6 billion by the end of our forecast period. This growth will be driven by MGM's new casino resort in the Cotai region. The new resort will enhance MGM's capacity in Macau and increase its market share. MGM expects its Macau revenues to double after the opening of the Cotai resort. If revenue grows to over $7 billion, there could be a 5% upside to our price estimate. In a bearish scenario, assuming that the Macau Casino industry starts witnessing slow growth and MGM's revenues remain under $4 billion by the end of the forecast period, there could be a downside of approximately 13% to our estimate for MGM's stock. We believe the increasing population of Chinese high net-worth individuals (HNIs) and the various infrastructure developments are likely to stimulate future growth.

Las Vegas Hotels

• Average Daily Rates for Las Vegas Hotels: Average Daily Rates for MGM Hotels in Las Vegas stood at $161 in 2020 and rose to $229 in 2022 and to $256 in 2023. We estimate that ADRs will grow to about $275 by 2030. In case the U.S. economy grows faster than anticipated and the Las Vegas gaming industry gains momentum, we believe there could be a potential upside of around 5% to the Trefis price estimate. This assumes that Average Daily Rates reach around the $300 level by the end of the Trefis forecast period. However, a sluggish recovery in the U.S. and higher hotel vacancy rates could pressure Average Daily Rates and pose a downside of more than 5% to the Trefis price estimate. This scenario will occur if Average Daily Rates remain range-bound under $200 by the end of the forecast period.

For additional details, select a driver above or a division from the interactive Trefis split for MGM Resorts at the top of the page.

BUSINESS SUMMARY

MGM Resorts International (MGM) is a holding company engaged in gaming, hospitality, and entertainment. It primarily owns and operates casino resorts that include gaming, hotel, dining, entertainment, retail, and other resort amenities in the U.S. and Macau.

Its Las Vegas strip operating properties include Bellagio, MGM Grand Las Vegas, Mandalay Bay, The Mirage, Luxor, Excalibur, New York-New York, and Monte Carlo. MGM also operates properties in other U.S. states: MGM Grand Detroit in Michigan and Beau Rivage and Gold Strike in Mississippi.

SOURCES OF VALUE

We believe that Macau operations are the primary source of value for MGM because:

Significantly Higher Volume Than Las Vegas Casinos

Macau offers significantly high gaming revenues as compared to the Las Vegas Strip. Macau gaming revenues are about five times higher than that of the Las Vegas Strip. In 2018, gaming revenues on the Las Vegas Strip were $7.24 billion as opposed to $37.6 billion in Macau. This significant difference is due to the very high demand for gambling in Macau, which is also the only place in China where gambling is legal. A lot of tourists from nearby countries visit Macau for gambling. The casino business is divided into two categories in Macau: VIP gaming and mass-market gaming. VIP gaming offers high volume but a lower casino holds percentage, while mass-market gaming offers a high hold percentage. The volume of mass-market gaming is picking up in Macau and will benefit MGM. MGM itself is developing another casino resort in the region. The new resort will further enhance MGM's capacity in Macau and drive growth in the coming years.

Higher Proportion of Non-Gaming Revenues In Revenue Mix Compared To Competitors

MGM Resorts offers a complete resort experience to its guests, including high-quality non-gaming amenities such as food and beverages, entertainment, retail outlets, beauty salons, spas, and shows. The firm's dependence on gaming revenue is comparatively lower than its competitors. Non-gaming revenues are affected by the growth of gaming revenues as most gaming customers utilize non-gaming/ancillary services offered at resorts. However, we believe that the firm's non-gaming services attract many convention/show attendees and general tourists, apart from gaming tourists.