Did I drive you away? With Barry Diller’s People Inc. bid now dead in the water, analysts and investors are left assessing a business where adj. EBITDA in the Strip, regional and Macau segments are heading backwards while the international digital business remains in the red.

• Revenue fell 1% to $4.21bn, but adj. EBITDA dropped 20% to $403m.
• Strip EBITDAR fell 12% to $531m, Regionals dropped 18% to $243m and MGM China declined 7% to $264m. Digital lost $4m.
• The day before the earnings MGM announced that, following its withdrawn takeover bid, People Inc. had agreed not to buy MGM shares that would take its combined stake above 29.9%
• People Inc. also committed to following the board’s recommendation on any change-of-control transaction.

I know what you’ll say: The Q3 figures explained why the analysts at Stifel remain unconvinced that inexpensive shares alone would bring investors back. “On one hand, shares look incredibly inexpensive, which we find compelling,” the team wrote.

• “On the other hand, we think investors won’t chase a valuation story right now against this uncertain macro backdrop.”

You say, ‘Oh, sing one we know’: Las Vegas is the principal reason for the uncertainty. Revenue declined only 2%, with casino revenue increasing 8%, but lower room rates drove a disproportionate earnings hit. Strip EBITDAR margin contracted ~310bps to 27.2%.

• More concerning, perhaps, the weakness spread beyond the value customer, who dominated previous discussions.
• “This summer, because of pricing, most notably air pricing into this market, it extended beyond just that,” CEO Bill Hornbuckle told analysts.
• COO Ayesha Molino confirmed: “We did see some ADR impacts across the portfolio toward the back half of the summer.”

Something in the air: The company cited Las Vegas airfares ~45% higher than the previous summer, elevated gasoline prices and short booking windows. Convention business remained strong, delivering more than 500,000 room nights, while high-end gaming supported casino revenue.

• But attracting gamblers carries its own costs. Hornbuckle said MGM’s casino marketing mix had increased from 20% to slightly above 30%, magnifying a shift underway over several years.
• Those marketing programs, he added, “take before they give.”

We need more: Stifel interpreted the increased database activity as a warning that promotions could support revenue while weighing on earnings conversion. Seaport similarly highlighted rising costs and poor flow-through, forecasting another 10% Strip EBITDAR decline in Q4.

• The company’s own recovery case rested partly on improving autumn demand. CFO Jonathan Halkyard described room rates moving from broadly flat or slightly lower in July to mid-single-digit declines in August and high-single-digit declines in September.
• “October right now is looking a lot more like July,” he said.
• Deutsche Bank, which cut its target, identified the sustainability of that improvement as the key year-end question.
• CBRE was more optimistic, viewing Q3 as a clearing event ahead of stronger convention and event activity.
• But Stifel wanted more evidence than one better month. Formula One and other major events offer support, but December also has convention business to replace.

Out in the country: The regional headline decline overstated the underlying deterioration because of the Northfield Park sale and ~$9m of prior-year business interruption proceeds. Adjusting for both, earnings declined 3%, while same-store revenue increased 1%.

• Halkyard attributed the remaining decline to unfavorable hold at two properties, saying the other regional operations generated earnings growth.
• Record slot win offered reassurance about core customers, although the portfolio still failed to offset Las Vegas’ weakness.

Macau caveat: MGM China revenue increased 5%, quarterly market share reached 17.1% and the branding fee paid to MGM Resorts increased $22m, exceeding the $20m reported earnings reduction. “Margins were consistent when taking this brand fee into account,” Halkyard said.

• That makes Macau a stronger underlying story than the reported decline suggests.
• Nevertheless, Stifel questioned the durability of market-share gains without margin erosion, while Seaport highlighted competitive reinvestment and remained cautious on the broader market.

Be-bop-a-Lula: International Digital narrowed its loss from $23m to $4m as revenue increased 6%. The separate BetMGM North America JV delivered 7% revenue growth and 112% EBITDA growth.

• But Brazil looms large over MGM’s in-house digital operation. Hornbuckle’s assessment was blunt: “Brazil is unfortunate, but the good news is it was costing us money, now it is costing us less.”

Bull/bear: MGM bulls see considerable value after the summer selloff. Macquarie maintained Outperform while Texas Capital retained Buy, anticipating renewed buybacks following the end of takeover discussions.

• MGM has $1.4bn of repurchase authorization remaining. But Osaka requires ~$1bn in each of 2027 and 2028.
• “Our opportunities to repurchase our shares will be impacted by that somewhat,” Halkyard acknowledged.
• But as Stifel argued, a resort opening in 2030 offers limited help with the immediate task of persuading company watchers that the business can deliver growth in the here and now.

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