MGM resorts slumps after surprise loss on Macau business expense

MGM Resorts International fell in late trading after reporting a surprise loss that included a US$1.2 billion expense for its Macau properties.

The largest casino operator on the Las Vegas Strip reported an adjusted third-quarter loss of US$1.39 a share on Wednesday (Nov 2). Analysts had been expecting a profit of 24 US cents. Revenue in the period reached US$3.41 billion, higher than the US$3.25 billion analysts estimated.

Shares fell as much as 15 per cent to US$29.72 in after-hours trading before mostly recovering. They were down 22 per cent this year through Wednesday’s close.

MGM, like other domestic casino operators, saw strong sales and profit at its US properties, including in its hometown of Las Vegas. The Macau business continues to be unprofitable, however, as China limits travel to the region due to the pandemic.

One of six concession holders in Macau, MGM incurred an unexpected expense due to changes in laws in the region. Macau authorities are considering renewing their agreement with the casino operator, which will likely be for a shorter period than MGM’s last concession. On an earnings call with investors, company executives said they still expect a decision from the Macau government by the end of the year.

Chief executive officer Bill Hornbuckle also said he anticipated an investment of as much as US$2.2 billion in New York, should the company be granted one of three new licences for expansion there. BLOOMBERG