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Why MGM Resorts Is Tumbling 10% Today

By Rich Duprey – May 1, 2020 at 3:47PM

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The global casino operator was hit with a one-two punch.

What happened

MGM Resorts (MGM 1.16%) fell 10% on Friday after reporting earnings yesterday that showed the casino operator swung to a $0.45-per-share adjusted loss in the first quarter, compared to a $0.14-per-share profit a year ago.

So what

The coronavirus pandemic hit casinos hard, but as a global operator, MGM's casinos were also hurt by shutdowns worldwide as well as the decline of air travel and bookings at hotels. Revenue for MGM tumbled by nearly $1 billion, falling to $2.25 billion from $3.18 billion a year ago. 

Abandoned casino sign

Image source: Getty Images.

The gambling industry got another harsh blow today when it was reported casino revenue has all but evaporated in Macao, as gross gambling revenue plunged 97% in April with the entire industry generating just $65 million.

Despite having been open for business since the middle of February, the new restrictions China imposed on visits to the city, along with occasional flare ups of COVID-19, have dampened any sort of desire to gamble right now.

What now

Even as casinos prepare to reopen here in the U.S., it's not likely there will be a quick rush by consumers to get back to the tables, and casino operators like MGM Resorts may find the road to recovery is a long one.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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