MGM stocks see an increase

  • MGM stock has become worth more since a $1 billion investment by InterActiveCorp was announced on Monday, surpassing the $21 a share mark for the company.
  • Since the outbreak of COVID-19, MGM Resorts stock has taken a hit due to a lack of profits resulting from the closure of their land-based locations.

NEW YORK The price of MGM Resorts (MGM) stock just saw an uptick for their shareholders as InterActiveCorp (IAC) has invested $1 billion in the company.

With this investment, IAC now holds a 12% stake in MGM which has led to a 14% spike in the worth of MGM’s shares. The investment is one that IAC is making to move forward with their plans of getting their foot in the door of the online gambling and online sports betting industry.

After the announcement on Monday, MGM stock went up to $21.64 with IAC seeing a drop in their company’s shares by 1.3% to a price of $131.31 a share. As of Tuesday morning, MGM stock is at $21.57 a share. It originally opened with a price of $22.42.

Why The Investment In MGM By IAC?

IAC sees a real growth opportunity through its deal with MGM. They believe that MGM will be able to open new doors for them in the realm of both the online gambling industry as well as their land-based options.

The brand that is MGM is well-known with a fanbase of over 34 million rewards members alone. These are now new things that IAC has available to them with their latest investment. And as MGM expands, which they will continue to do, IAC will now be along for the ride with their 12% of shares they now own with the company.

“What initially attracted us to MGM, besides its leadership in leisure, hospitality, and gaming, was an area that currently comprises a tiny portion of its revenue – online gaming,” said Barry Diller, IAC chairman. “IAC’s foundational concept of seeking opportunities to build interactive businesses is our base rationale – there is a digital-first opportunity within MGM Resorts’ already impressive offline businesses, and with our experience, we hope we can strongly contribute to the growth of online gaming.”

The Future Outlook For The Companies Now Intertwined

MGM has a multitude of ways to grow their online audience with not just their name but their skilled marketing team that has the ability to sweep the nation. With their sportsbook application, BetMGM, they will be seeking to enter more legal markets in the United States in the hope of furthering the company’s gaming growth and profit margins.

Due to the Coronavirus pandemic, the MGM stock price dropped by 35% because their hospitality businesses suffered from lockdowns. And the average price for their stock has teetered around $18 ever since.

However, with sports coming back to the scene and locations opening up again as well as this new deal with IAC, MGM stock prices are expected to see an upswing. Especially with the ever-growing popularity of legal sports betting which is a sector that the company plans to expand upon and strike while the iron’s hot.

“While we don’t expect IAC to serve as the stock promotion vehicle we’ve seen elsewhere in the space, we do believe the investment puts MGM more firmly on the map for investors within the online gaming and sports betting environment,” said Carlo Santarelli, Deutsche Bank analyst. “While the deal does not improve the operating circumstances in Las Vegas or help the near to medium term free cash flow dynamics of the company, it does highlight that MGM does in fact intend to be a major player in the online environment.”

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