MGM Resorts International (NYSE:MGM) is expecting a substantial increase in hotel revenue from the forthcoming inaugural Formula 1 Las Vegas Grand Prix, scheduled for November 16-18. CEO William Hornbuckle, in an earnings call on Thursday, highlighted MGM's readiness for the event, revealing that over 10,000 tickets have been sold and the Bellagio Fountain Club experience has been sold out. The event is anticipated to generate an additional $60 million in hotel revenue.
The Grand Prix, touted as the city’s most significant event ever, has attracted a high level of interest from international tourists. It will feature a grandstand next to the iconic Bellagio fountain. Following the Grand Prix, Hornbuckle will shift his focus to Super Bowl LVIII in February. This will be the first time Las Vegas will host the NFL's premier event, and MGM Resorts aims to attract corporate clients.
Hornbuckle also addressed recent challenges faced by the company, including a severe cybersecurity breach that led to temporary IT shutdowns and around $100 million in insured losses. He praised his team's resilience during this challenging period and acknowledged that the company would face higher cyber insurance premiums in the future.
In addition to this, he acknowledged a labor dispute with Local Culinary 226 during the earnings call. The union had been demanding wage increases and reduced workloads. A union agreement was reached post-call, marking another step in MGM's recovery from recent challenges.
These events come three years into Hornbuckle’s tenure as CEO of MGM Resorts, demonstrating the company's resilience and future-oriented focus despite facing significant obstacles.
InvestingPro Insights
The InvestingPro metrics and tips offer a more in-depth look into MGM Resorts International's financial situation. According to InvestingPro, MGM has a market cap of $13.05B and a P/E ratio of 39.09, indicating a high earnings multiple. In the last twelve months as of Q2 2023, the company's revenue growth was 25.57%, with a gross profit margin of 48.52%.
InvestingPro Tips highlight that MGM's management has been aggressively buying back shares, which can be a positive sign of the management's belief in the company's future. The strong earnings should allow management to continue dividend payments, which is beneficial for shareholders. However, it is also essential to note that analysts have revised their earnings downwards for the upcoming period, and the stock price movements are quite volatile.
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