Can MGM Resorts make a quick rebound in 2021?


MGM Resorts International (MGM -2.09%) is still suffering from the coronavirus pandemic, even though it has been open for several months here in the United States and has been operating in Macau since February. Strict restrictions on travel, casino capacity and public disinterest during a global health crisis adversely affected the performance of the casino operator.

While MGM shares have come back strong from the low point they hit in March, shares of the world-class resort town remain 10% below where they started in 2020. Here’s why they should rebound quickly in 2021.

Image source: Getty Images.

Despite being a global operator, MGM has far less exposure to the Macau market than either Las Vegas Sands Where Wynn Resorts. Before the pandemic, China accounted for just 22% of total revenue, compared to 60% to 70% or more for its peers.

Analysts expected China to rebound relatively quickly from the COVID-19 outbreak since the virus originated there and they dealt with it quickly, but it didn’t happen. So where Sands and Wynn will suffer more from the delay, MGM should emerge relatively unscathed.

In the United States, Las Vegas is still languishes and MGM’s presence there is strained, but it also has many resorts in regional markets across the country that could see a rapid recovery once a COVID-19 vaccine becomes widely available.

It should also get professional sports back to normal seasonal play, which could be a huge catalyst for MGM. He has spent a lot of time racking up properties and partnerships in key sports markets, and during the pandemic, sports betting (especially online) has been a big bright spot in the industry. As more states legalize online gambling and sports betting, BetMGM could be a top player in the market, driving MGM Resorts shares soaring in 2021.

Rich Duprey has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.


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