MGM resorts face revenue headwind amid China COVID-19 lockdowns
Yahoo Finance Live's Akiko Fujita and Brian Cheung break down the chart of the day.
Video Transcript
BRIAN CHUENG: Well you know, it's time for our chart of the day and it's brought to you by gambling and the reopening trade. And I want to take a look at MGM, they reported earnings yesterday. And we're looking at net revenues in their regional business, this actually excludes the big properties that they have on the strip. You can see an 11% increase over pre-pandemic levels in 2019, but we have another chart that shows you a not so good side of their earnings report.
This is net revenues in China, $268 million for the first quarter compared to $734 million. That's about a third of what they were hauling in before the pandemic. So obviously, this linked to COVID.
AKIKO FUJITA: Well, I was going to say that, I mean 2019 obviously, you know that doesn't factor in what happened with COVID, but that tells you just how challenging the environment has been when you've got a zero COVID policy. People aren't going.
BRIAN CHUENG: No, you can't.
AKIKO FUJITA: You can't go, you are locked down. And so that's got to be really hitting them significantly, at a time when MGM was making huge inroads in China. I mean so much, when you talk about pre-pandemic, of the revenue that came in, so many of these companies from China and Macau.
BRIAN CHUENG: Yeah, and certainly when it comes to MGM, the story very much the same with a lot of other gambling companies as well, the focus not necessarily on the physical properties, casinos themselves. Obviously, that's a big boon for their business, but also on online gambling as well. In the United States a lot of states coming online in terms of being able to place live sports bets just on your phone. We know that's a big story, not just for MGM, but for Caesars which also reported earnings recently as well. So very much an ongoing story but again, when you look at that China business that's supposed to be high growth for them. Not looking so good.
AKIKO FUJITA: Well, and not just the betting online, but also conferences coming back. I mean, that's been a big boon for these companies, especially in Vegas.
BRIAN CHUENG: Although, conferences at casinos, I don't really know how I feel about that.
