MGM Resorts International reportedly saw its share price plummet to a 52-week low yesterday after the American casino giant revealed that its net income for the second quarter had fallen by 41% year-on-year to stand at $123.8 million.
Second-quarter revenues improve:
According to a Thursday report from the Las Vegas Review-Journal newspaper, the Las Vegas-headquartered firm conversely recorded a 7.8% increase in revenues for the three-month period to just over $2.8 billion but that this was not enough to stop its quarterly earnings per share dipping by 41.7% to $0.21.
Financials were ‘better than expected’:
However, the newspaper reported that MGM Resorts International declared that its second-quarter results had been ‘better than we expected’ and that the decline in its stock price had largely been caused by its own weak financial projections for the coming third quarter.
It further explained that its share value had been negatively impacted by similar soft third-quarter predictions from Caesars Entertainment Corporation and an assertion from its rival’s Chief Executive Officer, Mark Frissora, that the six major casino operators in Las Vegas were preparing for a rough three months.
Hotel room rates cut:
Jim Murren, Chairman and Chief Executive Officer for MGM Resorts International, told the Las Vegas Review-Journal that his firm had been forced to cut the price of its Las Vegas hotel rooms during the second and third quarters in order to make up for a decrease in convention footfall. He also stated that business at his firm’s Mandalay Bay Resort and Casino was ‘about 80% back’ to where it had been before the shooting incident of October 1.
Murren’s statement read:
“The all-time record citywide in [third-quarter] conventions was in 2016. The second best was last year. The third best will be this year. This year’s not a bad convention quarter. It’s just up against these two incredible comps in the last couple of years.”
Third quarter ‘is always volatile’:
Responding to Frissora’s comment, Murren told the newspaper that third-quarter business in Las Vegas ‘is always volatile’ but that his firm intends to address the situation by continuing ‘to bring content to Las Vegas.’
Murren’s statement read:
“There’s an awful lot going on and there’s no cause to change the strategy when it has been working. What we need to do is when we have these pockets, do the best we can without degrading the customer experience because if we do that people won’t come back.”
Optimistic about the future:
The Las Vegas Review-Journal reported that Murren proclaimed that his firm’s business is due to be helped by the imminent opening of the MGM Springfield property in Massachusetts as well as the coming premiere of high-end luxury accommodation at Macau’s MGM Cotai. He additionally pointed to recent deals with the National Basketball Association (NBA), GVC Holdings and Boyd Gaming Corporation as reasons to remain optimistic.
According to Murren’s statement…
“We all get frustrated over revenue per available room (RevPAR). When we meet or exceed RevPAR, it’s no big deal. When we miss, it’s a big disaster. We’re going to be much more conservative in our RevPAR guidance.”