MGM Resorts (NYSE:MGM) announced it was revising its $1.25 billion share repurchase program after disappointing third-quarter results and the coronavirus outbreak combined to send the casino operator's stock plunging.
Shares are down 25% over the past month and are off 30% year to date, causing MGM to look at the opportunity to buy up shares at a significant discount.
Betting on a rebound
The casino operator announced after its earnings report last month it was going to repurchase shares between $29 and $34 a stub, but the turmoil created by the spread of COVID-19 caused MGM's stock, which was already falling, to accelerate its decline.
Although MGM generates most of its revenue in the U.S., it still has a significant presence in China, which ordered casinos to close for 15 days in February. Regulators recently reported that gross gambling revenues in Macau, the only place in China where it's legal to gamble, plunged 88% in February and analysts are forecasting March revenue will be down 70%.
MGM's stock was down almost 6% in early morning trading today.
The decline in the stock's value, however, led MGM Resorts to lower the price at which it would buy back its shares to between $23.50 and $28 a share. By reducing the price of the stock, the casino operator will be able to buy more shares, which could generate greater returns for MGM Resorts should its stock rebound. MGM stock trades below $22 each at this writing.