Investment Thesis

MGM Resorts International is a BUY at the current price of $37.09, as the market is undervaluing the company’s robust growth potential and strategic positioning in the recovering tourism sector. With a market cap of $9.49 billion, MGM stands to benefit from a resurgence in travel and leisure spending, particularly in Las Vegas and Macau, which are expected to see substantial foot traffic in the coming quarters. The company's integrated resort model, which combines gaming and hospitality, amplifies its competitive advantage and supports higher revenue per visitor.

Competitive Moat

is primarily driven by intangible assets, namely its strong brand recognition and strategic locations on the Las Vegas Strip, which creates significant network effects. The company benefits from scale economies, allowing it to offer a wide array of amenities that smaller competitors cannot match. Over the next 5-10 years, this moat appears durable due to substantial barriers to entry in the gaming and hospitality sectors, such as regulatory hurdles and capital intensity. The most notable competitive threats include rising competition from online gaming platforms and emerging regional casinos that could siphon off market share.

Growth Engine

Future revenue growth for MGM is anticipated to come from both organic and acquisition-driven avenues, with a significant focus on expanding its online gaming operations through BetMGM. The total addressable market for U.S. sports betting and iGaming is projected to exceed $40 billion by 2030, providing ample opportunities for revenue expansion. Additionally, MGM is likely to continue capturing market share in the recovering travel sector, especially as international tourism rebounds post-pandemic. The company’s recent investments in enhancing its Las Vegas properties position it favorably to attract premium customers, driving higher average daily rates and occupancy levels.