MGM Resorts withdraws its guidance for fiscal 2020 amidst uncertainty regarding the Coronavirus impact

In
an announcement on Wednesday, MGM Resorts commented that its CEO and chairman
Jim Murren has decided to step down before the end of his contract. Murren, who
was brought on board as the hospitality company’s CEO in 2008, said he will continue
to serve as the CEO for as long as the company takes to appoint a new one.

As
an initial response to the news, MGM Resorts was reported trading 7% higher in extending
trading on Wednesday. Losing some of it, the company settled around a 4% gain
later on. MGM’s market capitalization is at $17.3 billion. The company recorded
an around 17% gain in the stock market in the previous 12 months.

A
committee comprising independent directors has already been established at MGM
Resorts to look for a new CEO.

Travel
Ban And Suspended Business Operations To Hit MGM Resorts In 2020

The
previous financial guidance for fiscal 2020 has also been withdrawn as the U.S
casino operator expressed uncertainty regarding the extent of the impact of the
recent
outbreak of Coronavirus in China. The company cited wealthy Chinese
patronage to be the bearer of massive business in Macau and Las Vegas. The
currently imposed travel ban and suspended business operations across China,
therefore, are likely to hit the company’s performance in 2020.

MGM
also highlighted that it suspended operations at its Macau properties in
compliance with the government’s recommendation to contain the spread of the
virus. Since it is not yet evident that for how long will the operations remain
suspended, the company added, it is difficult to estimate the impact of the
health emergency on MGM Resorts’ performance in the long run.

A
few of the non-gaming operations at MGM Resorts in Macau, however, are still
operational in order to support the guests staying at the hotel. Such
operations, as per the company are amounting to $1.5 million in expenses per
day.

MGM Resort’s Performance In The Stock Market

At the time of writing, MGM Resorts is exchanging hands at $31.80 per share that marks an around 5% decline in the stock market in 2020 so far. In 2019, however, MGM performed largely upbeat in the stock market. It opened at $25 in January 2019 while closed the last year at a much higher $33.75 per share that translated into an almost 35% annual gain. MGM’s all-time high was recorded in 2007 when the stock was seen trading at around $97.