Is It The Right Time To Pick MGM Resorts Stock?

The shares of MGM Resorts (NYSE: MGM) have completely recovered to pre-Covid levels primarily supported by its sports betting application, BetMGM. Per recent filings, BetMGM has achieved a 17% market share of the U.S. sports betting and iGaming industry. From a fundamental perspective, MGM Resorts stock is unlikely to provide strong gains as its market capitalization has surged by $6.4 billion since August 2020 – comparable to Penn National Gaming stock (NASDAQ: PENN). However, according to the Trefis Machine Learning Engine, which identifies trends in the company’s historical stock price data, MGM Resorts stock will likely gain 2.9% over the next one month (twenty-one trading days) considering the 4.9% rise in the past week (five trading days). The stock is very likely to outperform the S&P500 over the next month (twenty-one trading days), with an expected excess return of 2.1% compared to the S&P500.

But how would these numbers change if you are interested in holding MGM Resorts stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test MGM Resorts stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF MGM stock moved by -5% over five trading days, THEN over the next twenty-one trading days, MGM stock moves an average of 4.9 percent, which implies an excess return of 2.6 percent compared to the S&P500.

More importantly, there is 60% probability of a positive return over the next twenty-one trading days and 53% probability of a positive excess return after a -5% change over five trading days.

Some Fun Scenarios, FAQs & Making Sense of MGM Resorts International Stock Movements:

Question 1: Is the average return for MGM Resorts International stock higher after a drop?

Answer: Consider two situations,

Case 1: MGM Resorts International stock drops by -5% or more in a week

Case 2: MGM Resorts International stock rises by 5% or more in a week

Is the average return for MGM Resorts International stock higher over the subsequent month after Case 1 or Case 2?

MGM stock fares better after Case 1, with an average return of 4.9% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.7% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how MGM Resorts International stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold MGM Resorts International stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For MGM stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for MGM Resorts International after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although MGM stock appears to be an exception to this general observation.

MGM’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for MGM Resorts International stock by changing the inputs in the charts above. Also, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how how the stock valuation for Home Depot vs World Wrestling Entertainment shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.

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