Please ensure Javascript is enabled for purposes of website accessibility

Why MGM Resorts International Stock Gained 10% Today

By Reuben Gregg Brewer – Jun 3, 2020 at 10:59AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Casino operator MGM Resorts is getting ready for its big day, and investors appear to be anticipating good results.

What happened

Shares of casino operator MGM Resorts International (MGM -1.83%) were up by roughly 10% at 10:30 a.m. EDT on Wall Street. They pulled back a little from that peak, but were still up in the high single digits by 11:30 a.m. Investors appear to be anticipating good news from the company on June 4.

So what

On May 27, MGM announced that it would reopen some of its properties in Las Vegas on June 4, notably the iconic Bellagio, New York-New York, MGM Grand Las Vegas, and The Signature. Basically all of the company's operations had been shut down because of the global effort to contain the spread of COVID-19. However, as social distancing rules have been eased and non-essential businesses have been, slowly, allowed to reopen, MGM is hoping it can get back to business as usual as quickly as possible.   

An investor points to a graph on his computer screen.

Image source: Getty Images.

Of course, the first step is opening the doors. And investors, it seems, are bidding the stock higher in anticipation of a successful restart on June 4. Although there's no way to know what will happen when Las Vegas starts to reopen, there's actually good reason to be excited. When regional casinos along the U.S. Gulf Coast reopened over the Labor Day holiday weekend, they saw gambling revenue increase 17% year over year, according to The Sun Herald. That was likely driven by pent-up local demand. Although Las Vegas is more of a destination for out of town clientele, the Gulf Coast results speak to a desire for gamblers to get back in the action. That's a clear positive, and it looks like investors are extrapolating it to Las Vegas and MGM Resorts.   

Now what

There's still a lot of uncertainty for casino operators like MGM as they look to restart their businesses. They will face higher costs because of new cleaning regimens and they will likely need to operate below pre-COVID-19 capacity to accommodate social distancing. Even if the opening weekend is a smashing success, long-term investors should tread carefully. There's still likely to be material volatility from here, especially if the COVID-19 containment efforts lead to a global recession. 

Reuben Gregg Brewer 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

MGM Resorts International Stock Quote
MGM Resorts International
$30.05 (-1.83%) $0.56

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.