MGM stock drifted lower early Tuesday after MGM Resorts International trounced first-quarter earnings estimates. That followed a regular session in which MGM cleared a buy point on news of surging gaming activity in China's Macau region.
In the earnings statement MGM Resorts CEO Bill Hornbuckle said the company "is executing across all of its geographies and channels." He highlighted record Las Vegas Strip adjusted operating earnings and "anticipated positive earnings later this year" for the BetMGM online betting platform.
Also on Monday, MGM Resorts said it agreed to buy a majority stake in Push Gaming, which makes digital games for betting companies. Terms were not disclosed.
Macau Lights Up In April
Other gaming stocks with Macau operations also pointed higher, including Wynn Resorts, Las Vegas Sands and Melco Resorts.
Macau gaming revenue in April vaulted 450% from a year ago to 14.72 billion patacas, or $1.82 billion — the highest level since before the coronavirus pandemic.
That marked a continued acceleration since Beijing ended Covid lockdown protocols late last year. At the same time Macau, a pseudo-autonomous region on China's south coast, relaxed testing requirements for visitors from the mainland.
In March, Macau gaming revenue rose 247% from a year ago to 12.74 billion patacas, following double-digit percentage gains in January and February.
Activity at the end of April got a lift from the national Labor Day holiday, which runs from April 29 to May 3.
MGM Earnings
Estimates: Analysts expected MGM to report earnings of 6 cents per share, up from a penny a year ago and reversing a Q4 loss. Revenue was expected rise 26% to $3.59 billion.
Results: MGM EPS leapt to 44 cents as revenue grew 36% to $3.87 billion.
MGM Stock
MGM stock added 0.9% to 46.46 in late trading, after climbing 2.5% in the regular session. That followed Friday's 3.5% rally, as MGM stock moved with conviction off its 50-day moving average.
On Monday, MGM climbed back above a 45.09 buy point from a six-week cup-with-handle base. The buy zone runs through 47.37.
Since buying a stock ahead of earnings comes with elevated risk, IBD recommends an options strategy to allow investors to capitalize on bullish earnings news.
Be sure to read IBD's The Big Picture every day to stay in sync with the market direction and what it means for your trading decisions.
Also in Monday trade, LVS stock rose 1.6%, Wynn 1.2% and Melco 0.8%. These casinos are more Macau-exposed than MGM Resorts. Las Vegas Sands is slightly extended from a buy point while WYNN stock and Melco are just below entries.
The Leisure-Gaming/Equipment industry group ranks No. 7 out of 197 industry groups based on price performance and momentum. IBD Stock Checkup puts MGM stock at No. 10 in the group, weighing both fundamental and technical factors.
