Why MGM Resorts International Stock Jumped 6.5% at the Open Today
Shares of casino operator MGM Resorts International (NYSE: MGM) rose as much as 6.5% in the first hour of trading on Thursday. Although today's advance is nice to see, it's important to remember that the stock is still down around 30% for the year in 2020. Which, when you step back and look at the big picture, helps explain why investors were so excited about two bits of news today.
The backstory here is centered around COVID-19, which led governments to shut down non-essential businesses like casinos earlier in the year in an effort to slow the fast-spreading virus. As if being forcibly shut down isn't bad enough, the lingering impact could be just as difficult to deal with, as people actively practice social distancing. Casinos are purpose-built to bring large numbers of people, often at-risk seniors, into close proximity to each other for long periods of time. Those are conditions in which the coronavirus has been proven to easily spread. MGM has faced rising costs, including for cleaning, and limited occupancy as it works to reopen for business. The U.S. fell into a recession in February and casinos are cyclical businesses, so there's very little going right for this industry at the moment.
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Source Fool.com
