Are Investors Too Optimistic On MGM Resorts Stock?

As the world economy grapples towards normalcy with an uptick in transportation demand, the hotel industry stocks have almost recovered to pre-Covid levels. The hospitality industry including integrated resorts such as MGM Resorts (NYSE: MGM) and Las Vegas Sands (NYSE: LVS), curtailed operational expenses to preserve cash and limit long-term debt.

Interestingly, the demand for digital gaming solutions during the pandemic triggered a paradigm shift in the casino business. Nearly all conventional casinos are foraying into the American sports betting and iGaming industry. Despite MGM’s revenues remaining 30% below pre-Covid levels due to a slump in Macau, the stock is being rewarded by investors due to the popularity of its sports betting application, BetMGM. Considering strong competitive rivalry in the sports betting business and MGM stock’s high current valuation multiple (P/S), Trefis believes that the stock price is stretched. We highlight the key factors driving MGM Resorts Valuation including revenues, earnings, and stock prices in an interactive dashboard.

Source: https://www.trefis.com/stock/mgm/articles/528580/are-investors-too-optimistic-on-mgm-resorts-stock/2021-11-03