MGM Resorts: All-Inclusive Pricing, ADR Pressure, and a Go-Private Floor That Makes $44 a Buy

MGM Resorts (NYSE: MGM) has traded below Barry Diller's $48.30 go-private offer price for weeks, and the recent press around its new all-inclusive Las Vegas package has only added noise to the signal. The package itself — $330 for two nights at Luxor or Excalibur, with meals, a show, and parking included — is not evidence of a desperate resort operator. It's a tactical tool aimed at MGM's oldest, lowest-ADR properties, filling rooms that would otherwise sell at weaker margins or sit empty. The real investment question is whether MGM's operating cash flow, its cheap valuation multiple, and the lingering go-private overhang make the current price a de-risked entry. The answer is yes, though the thesis carries real risk around debt load and a softening room rate environment. I rate this a Buy at $44.

What changed

MGM reported second-quarter 2026 results on July 29. Revenue came in at $4.5 billion, up 1% year-over-year and at a record for the quarter. Adjusted EPS of $0.59 missed the consensus estimate of $0.63, with the miss driven almost entirely by deteriorating margins at MGM China (where EBITDAR collapsed 15% to $257 million) and an expanding loss at the digital gaming unit. The Las Vegas Strip operation itself was healthier: revenue rose 3% to $2.2 billion, and segment EBITDAR (a cash-proxy measure that adds back rent and amortization common in hotel accounting) grew 3% to $735 million, with margins expanding 30 basis points to 33.9%.

The Strip results look good on the surface, but the room revenue trend is the weak link. Average daily rate (the average price a hotel charges per occupied room) fell 4% to $242. Revenue per available room (RevPAR, which combines occupancy and rate into a single utilization metric) also dropped 4% to $224, while occupancy held flat at 93%. Group and convention business accounted for only 20% of the room mix, down from the mid-20s percent range that sustained Strip hotels through 2023 and 2024. The casino side carried the quarter — table games win jumped 27%, with hold percentages expanding to 29.6% from 22.9%.

So what the quarter tells us: MGM is growing top-line revenue on the Strip, but it's doing so by drawing more casino spend from visitors who are paying less for their rooms. That mix shift is the reason the all-inclusive package makes sense as a complement, not a contradiction.

The all-inclusive package: not a margin bomb

The "All-Inclusive Experience" launched in March at Luxor and Excalibur, MGM's two oldest and most value-positioned Strip properties. At $330 for a two-night stay for two guests, the package bundles accommodation, resort fees, self-parking, six meals per guest (redeemed via digital vouchers at select restaurants across five South Strip properties), two show tickets, and one Big Apple Coaster ride each. MGM says the bundle saves guests more than $400 versus booking separately — and a line-item breakdown of à la carte pricing checks out at roughly $960 to $1,000 in standalone value.

The critical detail that the press coverage glosses over: this is not happening at Bellagio, Aria, or Cosmopolitan. Luxor and Excalibur have some of the oldest room inventories on the Strip. Their ADRs are well below the MGM Strip average. The package uses dynamic pricing with no blackout dates, which means rates float higher during peak demand — limiting margin cannibalization. Dining is funneled to lower-cost venues (buffets, food halls, sports bars), and the beverage inclusion is limited to one beer or wine per meal.

This is a volume-and-utilization play, not a luxury downgrade. For a property where rooms might otherwise sell at depressed transient rates, locking in a prepaid bundle that drives dining and entertainment spend across multiple MGM properties is margin-positive relative to the alternative. Caesars Entertainment launched a similar package at its budget properties around the same time, confirming this is an industry-level response to softer group demand rather than an MGM-specific panic move.

What I can't tell you is how much revenue the package has generated to date. MGM's Q2 filing and earnings call did not break out all-inclusive bookings as a separate line item, and no management commentary attributed Strip performance to the launch. That's a data gap, but it doesn't undermine the thesis — the package is too new and too small relative to MGM's $2.2 billion Strip revenue to move the needle either way in one quarter.

The go-private overhang is the real floor

The Diller offer is the structural reason the current price looks like a Buy, not the all-inclusive press. In early June, People Inc. (Diller's media conglomerate, formerly IAC) submitted a go-private proposal valuing MGM at more than $18 billion total — representing a 10.6% premium at the time. People Inc. already owns 26.1% of MGM and would hold just over 50.1% post-deal. MGM's board formed a special committee of independent directors to evaluate the offer. As of the Q2 earnings call in late July, management declined to comment on specifics, and the stock has drifted to $44.70.

Diller's thesis is straightforward: MGM owns roughly 40% of Strip rooms and table inventory, has the third-largest U.S. sports betting operation through BetMGM, and generates $1.5 billion in trailing free cash flow — all of which he argues the market undervalues because of MGM's $36.5 billion in total debt. Fertitta's parallel $17.6 billion go-private bid for Caesars provides a competitive reference point, though that deal remains in a go-shop period.

The offer price of $48.30 isn't a guarantee — the board could walk away, Diller could revise terms, or financing could fall through. But it is an explicit price anchor from a long-term holder who has accumulated MGM shares since 2020. At $44.70, the stock is trading 7.5% below that anchor. If the deal advances in any form, that's immediate, low-effort upside for public shareholders.

Valuation: cheap on an EBITDA and FCF basis

MGM trades at 7.4x EV/EBITDA, well below Las Vegas Sands at 11.3x, and near the bottom end of the casino-resort range. It trades at 0.63x revenue, which looks like a legacy multiple from a pre-growth era — except the business is no longer in that era. Free cash flow of $1.5 billion on trailing twelve months, growing 15% year-over-year, gives the stock a 13.3% FCF yield. Operating cash flow was $2.5 billion TTM. Capex of $968 million is disciplined for a company of this scale.

The balance sheet is the obvious counterargument. Total debt of $36.5 billion versus equity of $3.4 billion gives a debt-to-equity ratio of 180%. Net debt (total debt minus cash) sits at roughly $3.5 billion after accounting for $2.5 billion in cash on hand — which is manageable, but the gross leverage is real. Service costs on that debt load eat into the FCF picture, and the forward P/E of 28.5x tells you the market is not pricing this as a deep value name on an earnings basis. The cheapness lives in the enterprise value multiples and the cash flow yield, not the headline P/E.

That distinction matters. In a sector where operators are competing for share with all-inclusive packages, promotional spend, and room rate discounts, the company that generates the most free cash flow per room wins on durability. MGM's 8.8% FCF margin and 15% FCF growth argue that it's winning that fight even as ADR softens.

Risks

Three risks determine whether this Buy holds:

• Room rate pressure is structural, not seasonal. Group business at 20% of the Strip room mix is below the historical norm. If ADR continues to slide, the casino-driven revenue growth that carried Q2 won't compensate forever. The all-inclusive package mitigates this at Luxor and Excalibur but doesn't address it at Aria, Bellagio, or Cosmopolitan.

• MGM China margin collapse. EBITDAR fell 15% in Q2, and the 383-basis-point margin contraction to 23.3% is the single largest drag on consolidated earnings. A $21 million year-over-year increase in intercompany branding fees to the parent company adds a structural cost. If China demand stays soft, the earnings miss pattern could repeat.

• The Diller deal dies. If the go-private offer is formally withdrawn or materially reduced, the stock loses its clearest near-term floor. The 7.5% discount to the offer price exists because the market is pricing in that possibility.

What changes the rating

I would move to Hold if Q3 shows ADR declining more than 5% year-over-year while occupancy also slips below 90%, which would signal the room product is cracking across the portfolio, not just at the value end. I would downgrade if the Diller offer collapses and the stock fails to find support above $40, removing the go-private cushion and exposing the debt load as a genuine overhang.

Conversely, the upside case is asymmetric. If the Diller deal closes at or near $48.30, that's an immediate 8% return. If MGM's Strip revenue keeps growing while FCF margins hold above 8%, the EV/EBITDA multiple should re-rate toward the low teens, implying a price in the $55 to $60 range over two years. The operating business supports that valuation independently of the M&A outcome.

The bottom line

MGM is a company where the market is mispricing the next operating phase. The all-inclusive package at Luxor and Excalibur is a smart volume tool at the right properties, not a signal of desperation. The Q2 earnings miss was real but came from China and digital, not from the core Strip business. The stock trades at 7.4x EV/EBITDA with a 13.3% FCF yield, and a $48.30 go-private offer sits 7.5% above the current price as an explicit floor. The debt load is heavy, room rates are softening, and the China operation is underperforming — but at this price, those risks are already reflected. Buy.