MGM Resorts (NYSE:MGM) says the coronavirus outbreak has created too much volatility to properly price its stock so, it is canceling its recently announced share repurchase program.
Less than two weeks after revising its $1.25 billion buyback plan to take advantage of lower stock prices, the casino operator scrapped the whole thing because MGM's share price continues to tumble. It's now trading 50% or more below the range it had originally set.
Plunging through the floor
The modified Dutch tender auction MGM originally announced after earnings last month involved buying back stock in a range between $29 and $34 a share. The spread of COVID-19, however, impacted casino operations, causing the stock to fall even more, and leading MGM to revise the share price range lower to between $23.50 and $28 a share.
The stock market subsequently suffered three of the worst-ever one-day declines in the span of four days. MGM Resorts stock has lost 39% of its value since revising the buyback and is down 54% since originally announcing the plan.
Chairman and CEO Jim Murren said in a statement, "As a result of the unforeseen and unprecedented volatility in the financial markets due to coronavirus, and the resulting impact on our ability to determine and maintain an offering price range, we have decided to terminate the tender offer."
He also noted the global impact of the coronavirus has led to cancellations at its hotels and concert booking, as well as in China, where it had to close for two weeks and is still seeing low visitation.
"In light of these trends, we are actively managing our costs to help protect our margins," he said.
Shares of MGM Resorts closed Friday at $15.44 per share.