MGM Resorts International faces challenges amid licensing fee increase
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 16 2024
0mins
Should l Buy MGM?
Source: NASDAQ.COM
MGM Resorts International's stock fell by 3.02% and hit a 20-day low amid mixed market performance, with the Nasdaq-100 up 0.10% and the S&P 500 down 0.07%.
The decline is attributed to MGM China's licensing fee doubling from 1.75% to 3.5%, which is expected to significantly impact profitability and has led to a severe market reaction, erasing approximately $1.3 billion in market value. This fee increase represents a substantial burden on projected EBITDA, raising concerns among investors about the company's long-term valuation and profitability outlook.
The implications of this fee hike could lead to a cautious investor sentiment, as the increased costs may hinder MGM's ability to recover in the short term, despite previous gains in gaming tables. Investors are likely to remain vigilant regarding the company's financial health and future growth prospects.
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Analyst Views on MGM
Wall Street analysts forecast MGM stock price to rise
14 Analyst Rating
5 Buy
7 Hold
2 Sell
Hold
Current: 34.270
Low
29.00
Averages
40.31
High
56.00
Current: 34.270
Low
29.00
Averages
40.31
High
56.00
About MGM
MGM Resorts International is a global gaming and entertainment company with national and international locations featuring hotels and casinos, meetings and conference spaces, live and theatrical entertainment experiences, and a range of restaurant, nightlife and retail offerings. The Company’s segments include Las Vegas Strip Resorts, Regional Operations, MGM China, and MGM Digital. The Las Vegas Strip Resorts segment consists of Aria, Bellagio, The Cosmopolitan of Las Vegas, MGM Grand Las Vegas, Mandalay Bay, Luxor, New York-New York, Excalibur, and Park MGM. The Regional Operations segment consists of MGM Grand Detroit in Detroit, Michigan; Beau Rivage in Biloxi, Mississippi; Gold Strike Tunica in Tunica; Borgata in Atlantic City, New Jersey; MGM National Harbor in Prince George’s County, Maryland; MGM Springfield in Springfield, Massachusetts; Empire City in Yonkers, New York, and others. MGM Digital is its online gaming portfolio which is primarily comprised of LeoVegas.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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