Are MGM Stock Investors Happy, Or Did They Miss Out?

When it comes to casinos and gambling, the house always wins, as the saying goes. However, while MGM Resorts International (NYSE: MGM) has remained profitable, long-term investors haven't exactly been "winning" by holding this stock.

Relative to the S&P 500, shares in the company, best known for its ownership of several of the resorts dotting the Las Vegas Strip, have underperformed, and not only over the past year. Over the past three years, and over the past five years, investors would've been better off holding an index fund tracking the S&P 500, rather than owning a direct position in this stock.

Then again, while this stock has underperformed over these various timeframes, that doesn't necessarily mean it's a subpar investment going forward.

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Why MGM Resorts has trailed the S&P 500

The chart below compares MGM Resorts' one-, three-, and five-year performance to the S&P 500:

MGM Resorts has not paid a dividend since 2022, so if you factor in the effect of dividends reinvested into the S&P 500, the difference in total return is even more stark.

So, why have MGM Resorts' shares underperformed so much? During 2020 and 2021, even as the pandemic affected the performance of MGM's land-based casino properties in Las Vegas and in the Chinese possession of Macau, investors were busy bidding up the stock. This is largely due to excitement surrounding BetMGM, the company's online casino and sportsbook joint venture with Entain plc.

However, as the market realized that online gaming companies, while growing quickly, were years away from profitability, excitement over such stocks waned. MGM Resorts' stock price performance from 2022 onward has been more choppy, with shares trending even lower over the past year, due to another issue at hand.

Recent concerns place further pressure on shares

MGM Resorts' revenue finally returned to pre-pandemic levels in 2022, with the "revenge travel" trends helping to drive further growth in 2023. In 2024, however, concerns about the company's future prospects started to emerge.

These concerns intensified in 2025, as the perception that "Las Vegas is dying" due to high prices and a worsening customer experience continues to gain traction with investors and the general public alike. Even among the company's stronger-performing segments, such as its Macau properties and BetMGM, there has been heightened uncertainty.

In the case of BetMGM, there have been increased concerns that prediction markets like Kalshi will negatively affect the performance of traditional online sportsbooks.

Should you buy MGM Resorts International stock?

Investors considering this stock may not want to run out and enter a position immediately. At a forward price-to-earnings (P/E) of 13.4, it may be cheaper than competitors like Caesars Entertainment, which trades for 24.6 times forward earnings. But shares in other casino stocks, like Penn Entertainment, trade for less than 10 times forward earnings.

MGM Resorts remains a quality company, with a diverse portfolio of resort-style, regional, and online gaming businesses. Even quality stocks can underperform for long stretches of time.

If negative sentiment continues, the opportunity to buy this stock at a "can't miss" historically low price may be just around the corner.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.