Investment Thesis

MGM Resorts International (MGM) is a BUY at the current price of $37.01 due to its strong market position in the recovering post-pandemic travel and entertainment sector. The market is undervaluing MGM's potential for revenue growth driven by increased domestic tourism and expansion in online gaming through BetMGM. With a market cap of $10.12 billion, the company is well-positioned to capitalize on both traditional and digital gambling segments, which are expected to grow significantly over the next few years.

Competitive Moat

characterized by intangible assets, primarily its strong brand recognition and the strategic location of its properties on the Las Vegas Strip. This brand equity creates a high barrier to entry for new competitors and fosters customer loyalty, which is critical in the hospitality and gaming industry. The moat is durable over the next 5-10 years, although it faces threats from both established competitors like Caesars and emerging online platforms. The shift toward online gaming could dilute traditional casino revenue but also offers an avenue for growth.

Growth Engine

Future revenue growth for MGM is expected to emerge from several key areas: the recovery of the Las Vegas tourism market, expansion into online sports betting and iGaming through BetMGM, and potential international expansion in markets like Asia. The total addressable market for U.S. online gambling is projected to exceed $30 billion by 2030, positioning MGM favorably to capture market share. Organic growth will predominantly stem from increased foot traffic in Las Vegas and enhanced digital offerings, while acquisitions could also play a role, particularly in expanding BetMGM’s footprint.