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MGM Resorts International Message Board

  • investora2z investora2z Jun 21, 2013 8:21 AM Flag

    Around important levels

    The stock was obviously affected by the huge fall in the market yesterday, and the volumes were high. For short term investors, the stock has done great and it is still up around 60% from the 52 week low of $8.83 made in August. The stock has otherwise remained stuck in a large range over the last many years, and has been unable to cross $16. $9 has mostly proved to be a rebound point. The revenues have grown over the last few years, but, except last quarter where it did break even, the company has mostly reported net losses. The main problem, like many companies in this sector, is the debt on books. MGM had $13.69 billion debt on March 31, which is extremely high if one takes into account the other financial metrics. Servicing of the debt puts tremendous pressure on the margins. Most development / property related investment planned by the company is likely to require huge amount of funds. For example, the indoor arena off the Las Vegas Strip may cost it around $350 million till 2016. The funding may be through equity or debt, which may put some more pressure on the stock price. Further, there is also expectations of some news related to the lawsuit filed by MGT Capital Investments (MGT) for patent infringement. Negative news may put some short term pressure on the stock as the claims are expected to be high. However, if the performance of the last quarter is taken as a signal, there may be a few positive surprises in future earnings. The key is to improve the margins. That may help the stock regain some momentum, provided the overall market remains sensible. A deeper correction in the market may lead to deeper cuts in MGM as it is around important levels.

21.30-0.050(-0.23%)Apr 29 4:00 PMEDT