With A Strong Vegas Business And A Possible Recovery In Macau, What’s Next For MGM Stock?

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MGM Resorts

MGM Resorts stock (NYSE: MGM) has gained about 19% over the last month (21 trading days) considerably outperforming the S&P 500 which remains up by about 9% over the same period. The recent rally is being driven by a couple of factors. Although the company’s Q3 2022 earnings came in below estimates, revenues expanded by a solid 26% versus last year, driven by a strong performance in Las Vegas, which remains the company’s principal market. While gambling activity has picked up in the strip as Covid-19 issues appear largely behind the U.S., MGM also benefited from its acquisition of The Cosmopolitan of Las Vegas and Aria and Vdara. Moreover, recently China has eased certain Covid-19 restrictions, reducing quarantine times for tourists from other countries. This could help MGM’s Macau operations which have taken a considerable hit over the last two years, impacted by frequent lockdowns and travel restrictions.

However, now that MGM stock has seen a gain of about 19% over the last month, will it continue its upward trajectory in the near term, or is a decline imminent? Going by historical performance, there is a roughly equal chance of a rise or a decline in MGM stock over the next monthOut of 151 instances in the last ten years that MGM stock saw a twenty-one-day rise of 19% or more, 80 of them resulted in the stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 80 out of 151, or a 53% chance of a rise in MGM stock over the coming month, implying a neutral near-term outlook for the stock. See our analysis on  MGM Stock Chance of A Rise for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten years data

  • After moving 8.2% or more over five days, the stock rose in the next five days on 47% of the occasions.
  • After moving 2% or more over ten days, the stock rose in the next ten days on 51% of the occasions.
  • After moving 19% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 53% of the occasions.
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 Returns Nov 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MGM Return 3% -18% 27%
 S&P 500 Return 3% -16% 78%
 Trefis Multi-Strategy Portfolio 8% -16% 231%

[1] Month-to-date and year-to-date as of 11/11/2022
[2] Cumulative total returns since the end of 2016

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