Due to the coronavirus pandemic, MGM Resorts International (MGM - Free Report) is laying off 18,000 furloughed employees as the outbreak coronavirus pandemic has hit gambling hubs — Macau and Las Vegas..
Per Reuters, Hornbuckle stated in a letter, “Federal law requires companies to provide a date of separation for furloughed employees who are not recalled within six months. Regrettably, August 31, marks (that) date.”
As of Dec 31, 2019, the company had 52,000 fulltime and 18,000 part-time employees in the United States. In March, the company had to temporarily shutdown almost all its operations and also furloughed 62,000 of its workforce in the United States.
The company further said the company might recall the laid off employees by the end of 2021. The hired back employees will be able to retain their seniority and benefits. Meanwhile, other companies are also resorting to such a strategy to survive a financial crisis.
Coronavirus to Hurt Future Results
MGM Resorts’ financial numbers in 2020 is likely to be impacted by the outbreak of coronavirus. The company’s domestic operations were temporarily closed to contain the spread of the coronavirus. Although casinos in Macau properties are now open, the company is witnessing low visitation. In Las Vegas, revenues of reopened properties declined 50% year over year, while adjusted property EBITDAR declined 44%. Moreover, the company had reduced domestic CapEx by 50% this year to approximately $200 million due to the pandemic. The company believes that recovery in Las Vegas will depend on return of conventions, entertainment and air travel.
Shares of MGM Resorts have fallen 28.2% year to date, compared with the industry’s decline of 15%. MGM Resorts, which shares space with Wynn Resorts, Limited (WYNN - Free Report) , Las Vegas Sands Corp. (LVS - Free Report) and Boyd Gaming Corporation (BYD - Free Report) , carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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