MGM Resorts Shares Surge: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of MGM Resorts (NYS: MGM) popped nearly 11% higher Wednesday -- though for the life of me, I don't know why.

So what: The most obvious catalyst for the news was a positive earnings report yesterday from Macau next-door-neighbor Melco Crown (NAS: MPEL) , which grew revenues 67% and nearly tripled its adjusted EBITDA in the most recent quarter. If you assume that what's good news for one casino is good news for its brethren, this should bode well for MGM ...

Now what: But here's the thing: If you're using Melco's report as an excuse to expect good things out of MGM, well, those "good things" already happened. MGM reported earnings before Melco did, on August 8 in fact. And yes, MGM exceeded expectations then -- but by now, that's already old news.

Meanwhile, the only really "new" news at MGM is the less-than-propitious revelation that eight guests of the firm's Aria Resort & Casino in Las Vegas are suing MGM, alleging they contracted Legionnaires' disease at the resort over a period from June to July of this year. Bidding the shares up 11% on that news doesn't make a lot of sense to me. Then again, lately, not a lot about the stock markethas made sense.

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At the time thisarticle was published Fool contributorRich Smithdoes not own (or short) either company named above. The Motley Fool has adisclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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