Hawk Perspective: MGM likely with solid support at $35 but upside should also be tempered, selling August $40/$35 strangles for $1.35 seems to be a fair approach.

AI Generated

MGM Resorts International (MGM) will release its Q2 2025 earnings after the close on Wednesday, July 30, with the conference call scheduled for 5:00PM ET. Wall Street consensus is calling for EPS of $0.55 on revenues of $4.28B, both up sequentially as the company aims to recover from a challenging prior year. These forecasts reflect anticipated 4.5% topline growth and 10%+ earnings expansion compared to Q1, with analysts looking for a demonstration of fundamental momentum as MGM consolidates share gains in Las Vegas and its expanding digital properties. For full-year 2025, consensus projects $2.00 EPS and nearly $16.9B in revenues, up 10% and 6% year-on-year, respectively.

Recent earnings history has been mixed but trending stronger: Q1 2025’s $0.69 EPS beat by $0.19, but revenues slipped 2.4% YoY. The past six quarters have averaged a 5.2% maximum earnings-day move, with four positive and two negative reactions—the most recent being a modest rebound. Shares have lagged the S&P this year (down 10.8% to $38.33), but have gradually emerged from June’s lows thanks to improving travel trends and digital tailwinds.

MGM is a global gaming and hospitality leader, with a dominant presence on the Las Vegas Strip, strong regional U.S. properties, and a rapidly growing digital franchise through BetMGM and international partnerships. The business model blends gaming revenue (nearly 60%+ of domestic EBIT), hotel and F&B segments, and high-margin digital operations. Growth levers include loyalty program integrations, asset-light international JV expansion, and a robust events calendar tied to increased sporting/arena traffic. Notably, BetMGM’s Q2 business update heralded expanding profitability in U.S. digital, while Macau/China tourism continued to rebound strongly even as competition stiffened.

Management commentary has focused on margin discipline and tech-driven guest experience initiatives. CEO Bill Hornbuckle, in recent public appearances, stressed the completion of key property renovations, robust F1, Super Bowl, and high-ticket events calendar for Las Vegas, and early successes from BetMGM’s U.K. and Ontario launches. Read-throughs from sector peers—Las Vegas Sands, Caesars, and Penn Entertainment—all point to strong U.S. and international demand, stabilizing regional trends, and improved cost structures, though higher inflation and wage pressures persist.

MGM’s valuation remains attractive versus peers: shares trade at 17–18x forward earnings and 1.2x sales, both below the group median. This multiple accommodates sustained margin and digital profit growth, as consensus profit and revenue estimates have both nudged higher in the last 90 days (2025 EPS up $0.10, revenue up $180M amid positive guidance momentum). Forward projections imply 10% annual EPS growth and high-single-digit topline gains through 2026, with a re-acceleration expected in digital as new market entry costs dissipate.

Analyst sentiment is generally bullish with a $46.53–$48.00 average twelve-month price target, about 20% above current levels, and outliers as high as $60. Most major brokers maintain Buy or Strong Buy ratings, spotlighting MGM’s unique Strip/digital mix, upside from China/Macau, and strategic buybacks. The Street notes the company’s improved balance sheet and the tailwind from event-driven demand, though some comment on Las Vegas supply and international regulatory uncertainty as moderating factors.

Institutional ownership is robust at 68.1%, with $1.46B in new inflows and a net addition of 372 institutional buyers over the past year, while outflows totaled just $721M. Major shareholders include BlackRock, Vanguard, and public companies, all holding multi-billion dollar stakes. Insider activity presents a neutral backdrop: CFO Jonathan Halkyard bought $321,700 in shares earlier this year at $32.17, but insider selling has outweighed buying in recent months, with sales from COO Corey Sanders and various directors. Over the trailing year, insider ownership remains steady at 1.08%—a modest figure typical for large hospitality operators.

Technically, MGM shares recently bounced off June’s $33 low, reclaiming the 50-day average at $34.40 and currently consolidating near $37.53. The chart’s primary support lies at $34–$35 (volume point of control and anchored VWAP from 2024), with resistance at $42 (2025 high) and a new ceiling forming at $39 (September $39 call wall). RSI sits at 58, below overbought range, and momentum is cautiously positive. MACD is above signal, reflecting renewed trend strength, though past rallies have faded at major call strike “walls.” Sector seasonality is favorable in late summer as event/congress and international travel volumes rise, but supply from reopening projects may temper beta.

Options market activity is robust and thematically split. The OptionsHawk Database highlights a significant buy-write in September $39 calls (7,200 in OI), heavy August 1st $37.5 calls sold (3,000 contracts), 3,000 June 2026 $33 puts sold, and notable buying in both September and January $33 calls, reflecting a mix of covered call, long-term bullish, and put underwriting strategies. Open interest is highest in key strikes through November, with overall options flow positioning for a move toward $39–$40 but acknowledging resistance. The market is pricing a 5.1% implied move for earnings, just above realized volatility for the sector, with IV30 at the 68th percentile and implied volatility crush averaging –11% post-report.

Social sentiment trends positive into the print: StockTwits and Swaggystocks show rising bullish message counts, with users focusing on MGM’s Strip leadership, digital innovations, and the growing value of casino assets. 

MGM heads into Q2 earnings with growing operational momentum, a favorable risk/reward profile, and robust options market engagement reflecting both tactical bull and hedged structures. Institutional and retail capital flows confirm high-conviction positioning, but with the stock not far from core resistance levels, a decisive move will depend on confirmation that Las Vegas and digital profit growth remain on track for the rest of 2025 and into 2026