MGM expects $100M Q3 earnings drop owing to ransomware

The shares of MGM Resorts International saw a downward slide following the ransomware attack on the company. The casino operator also anticipates third-quarter revenue will see a shortfall of $100 million. The figure is before EBITDAR. This includes taxation, interest, depreciation, amortization, and the cost of rent. 

The cyber attack was responsible for creating obstacles with regards to MGM’s local business. This includes the Las Vegas Strip as well as the local casinos. This unfortunate situation lasted ten days, and the hacking was apparently done by a hacking syndicate called Scattered Spider. The syndicate followed its modus operandi with Caesars Entertainment, as well as various more famous businesses involved in different verticals. 

MGM Resorts took the initiative to file Form 8-K with the Securities and Exchange Commission (SEC). The company mentioned the fact that it had come under a $10 million loss due to the hacking in the third quarter. The expenses involved advisory services, legal fees, and other third-party fees. The guest occupancy figures, too, went down before September, when the situation was somehow under control. The occupancy level was 88%, whereas during the same month in the year before, it stood at 93%. This is because the online facilities for carrying out room bookings were blocked. 

According to the casino news, The CEO of MGM, Bill Hornbuckle, issued notifications to its customer base, mentioning the fact that the hackers were able to breach the system and gain access to the names, contact details, and other personal information of certain customers who were involved with the company before March 2019. Some social security and passport information was also tampered with.  

For one month now, the MGM shares have seen a downward slide of 20%, which brings them into bear market space. The stocks stand at 32.25% less than their two-month high. The money that was paid to the hackers apparently came under cyber insurance.

MGM and Caesars are facing this most unfortunate situation at a time when experts are of the opinion that there will be an upcoming recession scenario. 

MGM has not divulged any date regarding its 3rd quarter earnings. However, it is presumed to be somewhere around November 1, 2023. Once the date is made public, it will be easier for analysts to comprehend the exact effect of the cyber breach.

As per the filing with the SEC, MGM assured that the seriousness of the matter was controlled in September and was expecting a better present quarter. The company places more faith in the 4th quarter earnings and attributes them to the upcoming Formula 1 in November 2023.