MGM Resorts (MGM) says its online betting app BetMGM is on track to grab up to 25% market share long-term and rake in $1 billion net revenue by 2022. MGM stock rose.
The casino operator is holding an investor day event today.
Its $1 billion forecast for next year would be up sharply from the $178 million in BetMGM revenue last year as well as Wall Street estimates for $500 million this year. In fact, in Q1 alone, BetMGM had revenue of $163 million, up 430% from a year ago and 114% from Q4.
Long-term EBITDA margins estimates remain at 30%-35%. The company plans to invest $450 million in the business in 2021, expecting it to be the highest annual cash usage.
Meanwhile, MGM’s estimate for 25% market share contrasts with the app’s current share of about 18%. It operates in 12 states, and the company expects it to be in 20 markets by the end of the year. It has 160 million customer profiles.
Such steep growth would also come in a just a short time. Launched in New Jersey in 2019 with partner GVC Holdings (now Entain), BetMGM went live in Nevada in March 2020 and has continued rolling out elsewhere since then.
Morgan Stanley analyst Thomas Allen expects the company to guide 2021 BetMGM revenue of more than $500 million at its investor day event.
“We see potential for MGM to guide to revenue more than tripling in 2021, a step-up from its 4Q20 guide of more than 100% growth and further highlighting this attractive business,” he wrote in a recent note to clients Tuesday. “We expect to hear more about profitability (& its components), market access and partnerships.”
Most recently, New York approved online sports wagering. The state’s gaming commission will take bids and choose two platform providers, with the option of adding more. Licensees must pay a one-time $25 million fee to the state. And the operator’s license will need to be renewed after 10 years.
MGM CEO Adam Greenblatt said at the investor day he “sees a path to market in New York.” He also said MGM’s efforts to focus on online betting during the pandemic is “starting to bear fruit.”
Shares rose 3.6% to 40.99 on the stock market today. MGM stock is extended from a 23.57 buy point from a double bottom in September and from multiple pullbacks to the 10-week line, according to MarketSmith chart analysis. Shares hit a 52-week high of 42.74 intraday on April 6 but have since retreated to their 50-day moving average.
MGM Resorts’ relative strength line has recovered to pre-pandemic highs, but has been going sideways in recent days. Its RS Rating is 93 out of a possible 99. Its EPS Rating is just 10, as it’s posted four straight quarters of losses, as casino stocks were decimated during Covid closures.
Online sports betting has been a focus for MGM, especially as its casinos have struggled through shutdowns during the pandemic.
BetMGM also includes more than 100 gaming kiosks across MGM’s Las Vegas properties.
MGM solidified its partnership with Entain with a second round of investment in BetMGM in July 2020. MGM made an $11 billion all-cash takeover bid for Entain on Jan. 3, which was rebuffed.
BetMGM’s total addressable market in North America is an estimated $28 billion, split 50-50 between online sports betting and iGaming. Greenblatt says that figure is expected to reach $32 billion long-term. Canada represents a $4.4 billion market, in which BetMGM expects to participate.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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