MGM Drops Off Despite Resort Openings

The hospitality giant is adding Luxor, Mandalay Bay, Four Seasons Las Vegas and ARIA to the list of open resorts

The shares of MGM Resorts International (NYSE: MGM) are down 4.5% at $21.04 this morning, after the hospitality giant announced it would open more resorts by July 1, including Luxor, Mandalay Bay, Four Seasons Las Vegas, and ARIA. Guests will be able to enjoy the pool areas and fine dining, though some amenities are still limited. "Our guests are having a great time and are thrilled to be back in the city they love. We are eager to get more of our employees back to work and enhance the Las Vegas experience with additional resorts," said MGM Resorts Acting CEO and President Bill Hornbuckle.

The effects of the coronavirus pandemic have been particularly harsh on the tourism industry. On the charts, MGM has been slowly climbing out of its mid-March lows near the $6 level. The equity found overhead pressure at the $24 mark earlier this week, which is comparatively lower to its $34.36 mid-January peak. Nonetheless, MGM is showing signs of recovery, with an 80% lead for the quarter.

Analysts were mostly hesitant toward MGM coming into today, with 10 of the 12 in question carrying a tepid "hold" or worse, and only two sporting a " strong buy." Meanwhile, the 12-month consensus target price of $18.04 is a whopping 13.37% discount to current levels.

The appetite for calls is unusually high in the option pits, however. In the last 10 days, 5.83 calls were bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 88% of readings from the past year, meaning calls are being picked up at a faster-than-usual clip.