Latest news for MGM China Holdings (OTC:MCHVY) Stock

MGM China Holdings

MGM China is one of six casino license holders in Macao and operates two integrated resorts: the MGM Macau resort in the Peninsula and MGM Cotai in Cotai. The company is allowed to operate 750 gaming tables during its new 10-year concession period of 2023-32.

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Goldman Sees An Alpha-Generating Opportunity In Macau Gaming

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MGM China Holdings Ltd

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DraftKings (DKNG) posted mixed second-quarter results, surpassing earnings expectations but missing the consensus estimate for revenue. With prevailing macroeconomic risks, legal challenges, and deteriorating financial health, should investors consider DKNG a buy before the next sports betting rise? Read on to know more... DraftKings Inc. (<a href="https://stocknews.com/stock/DKNG/">DKNG</a>), a leading digital sports entertainment and gaming company, reported mixed second-quarter 2024 performance. DraftKings posted <a href="https://draftkings.gcs-web.com/news-releases/news-release-details/draftkings-reports-second-quarter-revenue-growth-26-1104-0">revenue of $1.10 billion</a>, up $230 million from the same period of 2023. Despite an impressive year-over-year growth, the company's revenue fell short of analysts' estimate of $1.12.
DKNG reported an adjusted earnings per share of $0.22, compared to the consensus estimate of $0.19. The online sports betting company raised its 2024 revenue guidance midpoint to $5.15 billion. However, DraftKings lowered its full-year adjusted EBITDA guidance midpoint from $500 million to $380 million.
Moreover, investors are shifting away from growth-dependent stocks like DKNG due to a renewed focus on macroeconomic risk factors. The recent jobs report indicated that hiring slowed significantly in July and unemployment rose to the highest in almost three years, increasing concerns of an economic slowdown and fears that the Fed waited too long to cut interest rates.
The Labor Department reported that employers <a href="https://www.reuters.com/markets/rates-bonds/size-looming-fed-rate-cuts-may-hinge-job-market-2024-08-02/">added only 114,000 jobs in July</a>, while the unemployment rate increased to 4.3% from 4.1% in June. That represents a surprising weakening in the labor market that had previously remained resilient despite the Fed's aggressive interest rate hikes in 2022 and 2023.
DraftKings' elevated valuation may expose the company to downside risk if macroeconomic concerns persist and continue to influence the broader market. Also, the company faces several challenges, including legal proceedings and the discontinuation of certain product offerings.
In July 2024, DKNG announced shutting down its non-fungible token (NFT) business citing legal developments. A federal judge allowed a class action lawsuit against DraftKings to move forward after finding plaintiffs "plausibly pled' DKNG's NFTs were unregistered securities, as reported by <a href="https://today.westlaw.com/Document/I2bafee423bc911ef8921fbef1a541940/View/FullText.html?transitionType=Default&amp;contextData=(sc.Default)&amp;firstPage=true">Westlaw</a>.
"After careful consideration, DraftKings has decided to discontinue Reignmakers and our NFT Marketplace, effective immediately, due to recent legal developments. This decision was not made lightly, and we believe it is the right course of action," the sports gambling company said in an email to customers.
Shares of DKNG have plunged 20.5% over the past month and 31.6% over the past year to close the last trading session at $29.85.
Let's discuss several other factors that could influence DKNG's performance in the upcoming months:
Mixed Financials
For the second quarter that ended June 30, 2024, DKNG's revenue increased 26.2% year-over-year to $1.10 billion. However, its cost of revenue grew 30% from the year-ago value to $663.41 million. The company reported a loss from operations of $32.39 million.
In addition, the company's adjusted EBITDA came in at $127.97 million, up 75.4% from the prior year's quarter. DraftKings' adjusted earnings per share rose 57.1% year-over-year to $0.22.
Mixed Analyst Estimates
Analysts expect DKNG's revenue for the third quarter (ending September 2024) to grow 40% year-over-year to $1.11 billion. However, the company is expected to report a loss per share of $0.40 for the current quarter.
Additionally, DraftKings' revenue for the fiscal year 2024 (ending December 2024) is anticipated to grow 39% year-over-year to $5.09 billion. However, the company is expected to report a loss per share of $0.28 for the ongoing year.
Dim Profitability
DKNG's trailing-12-month EBIT margin of negative 10.9% compared to the 7.82% industry average. Its trailing-12-month net income margin of negative 9.45% compared to the industry average of 4.62%. Likewise, its trailing-12-month CAPEX/Sales of 0.39% is 87.2% lower than the industry average of 3.03%.
Furthermore, the stock's trailing-12-month <a href="https://www.investopedia.com/terms/r/roce.asp">ROCE</a>, ROTC, and ROTA of negative 35.09%, negative 11.79%, and negative 9.64% are unfavorably compared to the industry averages of 11.41%, 6.14%, and 4.19%, respectively.
POWR Ratings Reflect a Bleak Outlook
DKNG's bleak fundamentals are reflected in its <a href="https://stocknews.com/powr-ratings/">POWR Ratings</a>. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. DKNG has a D grade in Value, consistent with its lower-than-industry valuation. The stock has a D for Stability, justified by its 24-month beta of 2.91.
Within the <a href="https://stocknews.com/category/entertainment-casinos-gambling/">Entertainment-Casinos/Gambling</a> industry, DKNG is ranked #24 out of 25 stocks.
Beyond what I have stated above, we have also given DKNG grades for Value, Quality, and Sentiment. Get all DKNG ratings <a href="https://stocknews.com/stock/DKNG/">here</a>.
Bottom Line
DKNG surpassed earnings expectations and missed analysts' revenue forecast in the second quarter of fiscal 2024. The online sports betting company increased its full-year revenue guidance but lowered significantly its adjusted EBITDA outlook. Lingering macroeconomic concerns and legal challenges are eroding investor confidence in DKNG's stock.
Considering DraftKings' deteriorating financials, elevated valuation, and bleak growth prospects, it would be wise to avoid this stock now.
Stocks to Consider Instead of DraftKings Inc. (DKNG)
Given its uncertain short-term prospects, the odds of DKNG outperforming in the weeks and months ahead are compromised. However, there are many industry peers with much more impressive POWR Ratings. So, consider these three A-rated (Strong Buy) or B-rated (Buy) stocks from the <a href="https://stocknews.com/category/entertainment-casinos-gambling/">Entertainment-Casinos/Gambling</a> industry instead:
PlayAGS, Inc. (<a href="https://stocknews.com/stock/AGS/">AGS</a>)
MGM China Holdings Ltd. (<a href="https://stocknews.com/stock/MCHVY/">MCHVY</a>)
Accel Entertainment, Inc. (<a href="https://stocknews.com/stock/ACEL/">ACEL</a>)
To explore more A and B-rated gambling stocks, <a href="https://stocknews.com/category/entertainment-casinos-gambling/">click here</a>.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
<a href="https://report.stocknews.com/sign-up/stock-market-outlook-2024/?formplacement=artbotad_smo24_rep">2024 Stock Market Outlook &gt;</a>

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DKNG shares rose $0.05 (+0.17%) in premarket trading Tuesday. Year-to-date, DKNG has declined -15.32%, versus a 12.91% rise in the benchmark S&amp;P 500 index during the same period.
<hr><div style="clear:both;"></div> <h2>About the Author: Mangeet Kaur Bouns</h2> <img src='https:/wp-content/uploads/2022/01/Mangeet-Kaur-Bouns_Image-4.jpg' style="float:left; padding:5px;width:125px;">Mangeet's keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet's looks to help retail investors understand the underlying factors before making investment decisions.<a href="https://stocknews.com/authors/?author=mangeet-kaurbouns">More...</a>The post <a href=https://stocknews.com/news/dkng-acel-ags-mchvy-is-draftkings-a-buy-before-the-next-sports-betting-surge/>Is DraftKings a Buy Before the Next Sports Betting Surge?</a> appeared first on <a href=https://stocknews.com/>StockNews.com</a>

Is DraftKings a Buy Before the Next Sports Betting Surge?

MGM China to pay a special dividend as post-pandemic recovery continues

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MGM China Holdings goes ex-dividend tomorrow

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A more favorable policy background and stable Yuan outlook have helped Macau Gaming stocks not to only re-rate, but also to outperform the market by 10 percent in what&rsquo;s gone of 2016. However unlike the past couple of years, shares moved in very different directions. While Wynn Macau is up more than 46 percent year-to-date, Melco Crown Entertainment Ltd (ADR) (NASDAQ: <a class="ticker" href="/stock/mpel#NASDAQ">MPEL</a>) has lost almost 16.5 percent.

	Analysts at Goldman Sachs believe, &ldquo;Sector valuation looks fair at close to mid-cycle now.&rdquo; Nonetheless, they &ldquo;still see beta and alpha generation opportunities.&rdquo;

	Having said this, the analysts recommended investors to behave selectively, keeping a close eye on sector trends and earnings revisions. The firm anticipates:
<ul>
	<li>
		1) &ldquo;Slow VIP GGR on regional competition, bad debt risk and closer scrutiny on junkets&rdquo;</li>
	<li>
		2) Faster growth in mass market, with novelty and cluster effects following a few more casino openings</li>
	<li>
		3) Higher contribution of non-gaming to overall profit, driven by retail, although &ldquo;oversupply could pressure rents at existing properties near term (i.e. Venetian).&rdquo;</li>
</ul>

	As per Goldman Sachs&rsquo; fiscal 2017 estimates, Wynn could post EBITDA 25 percent above consensus, while Galaxy and Sands China could miss by 6 percent. Despite the upgrades seen in recent weeks, the experts believe Wynn could deliver further upside, &ldquo;as the market assumes Wynn Palace will only add 1-2% market share with a table yield 40% below the industry avg. a year later,&rdquo; an estimate that Goldman analysts consider conservative, given the company&rsquo;s track record.

	The firm revised its ratings and price target on Macau Gaming stocks as illustrated in the chart below:

	<img alt="" src="https://www.benzinga.com/files/u82070/macau_gaming_gs.png" />

	Source: Goldman Sachs

Slowing demand from gamblers in Macau and and intensifying competition for their yuan lead Deutsche Bank to downgrade leading players in the sector Friday while slashing targets across the board.

	Deutsche&#39;s Karen Tang also cited rising labor costs and longer times for approval required for new facilities.

	Tang downgraded the Macau unit of Wynn Resorts (NASDAQ: <a class="ticker" href="/stock/wynn#NASDAQ">WYNN</a>) to Sell from Hold and moved her rating on the China Sands unit of Las Vegas Sands (NYSE: <a class="ticker" href="/stock/lvs#NYSE">LVS</a>) to Hold from Buy.

	Both units trade on the Hong Kong stock exchange. Wynn Macau fell 3.3 percent Friday morning; China Sands lost 0.4 percent.

	Macau, the world&#39;s largest gambling center, is the only place in China where casinos are legal and revenues have declined lately in the face of that country&#39;s economic slowdown, as well as a crackdown on corruption that has so far resulted in the reported arrest of more than 60,000.

	As if to add insult to injury, local authorities will impose a smoking ban starting October 6 on Macau&#39;s mass-market gaming floors.

	High-end private VIP gaming rooms are exempt, but China&#39;s smoking rate is nearly 70 percent higher than the United States.

	In addition, Tang made the following target cuts: Galaxy Entertainment (OTC: <a class="ticker" href="/stock/gxyey#OTC">GXYEY</a>) $61.50 from $80; Melco Crown Entertainment (NASDAQ: <a class="ticker" href="/stock/mpel#NASDAQ">MPEL</a>) $29.03 from $41; MGM China (OTC: <a class="ticker" href="/stock/mchvy#OTC">MCHVY</a>) $27 from $32 and SJM Holdings (OTC: <a class="ticker" href="/stock/sjmhf#OTC">SJMHF</a>) $20.05 from $21.50.

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