Traders Bet MGM Shares to Double UpBy: Harper Whitefield
Although many casino industry experts expressed their critics to the opening of the new CityCenter in Las Vegas this month, investors at Wall Street strongly believe in MGM’s latest move. With a current share price of $9.41, option traders are betting on a price of $20 in January 2011.
It has to be seen if CityCenter can help MGM reduce its $13 billion long term debt. Industry experts believe that the 6,000 extra rooms will mainly compete with MGM’s other casinos, such as the Bellagio and New York. However, with an expected rise of 7 percent extra visitors is 2010, investors strongly believe that MGM will turn this new project into a long term success.
MGM’s share price has been on a wild ride of the last few years. With a peak of $96.40 a share in October 2007, the current price could easily double up in the coming year, making up for a bit of the 84% loss in 2008. With 1.5 times more bullish- than bearish options traded at the moment, Wall Street sure believes in a bright future for this giant in the casino industry.