Ross Gerber
CEO of Gerber Kawasaki, Portfolio Manager of GK ETF
MGM Resorts is a steal at current prices and worth $55-60 a share, because its assets cannot be replaced. Barry Diller is preparing a bid for the portion he doesn't own at an $18 billion valuation, per the New York Times as reported by Bloomberg. Management needs to change, Las Vegas is harder as young people gamble on everything rather than in casinos, and the BetMGM app has largely disappointed. x.com x.comÂ
Disney is a dog with fleas. Absurdly high theme-park prices face demand elasticity as a weakening consumer in a K-shaped economy pulls back. Its movie lineup is dated, with live-action Moana joining Snow White as box-office bombs; its balance sheet carries heavy debt from poorly conceived acquisitions that could curb park spending; and AI threatens several businesses. There is a price for everything: below $90, reward versus risk turns favorable. x.com x.comÂ
Disney's old IP thesis was wrong because its business has been too capital-intensive as run this century. Even buying at the exact lows over roughly 12 years would have meant losing badly to inflation. Re-entry would only make sense if Disney changed its operating model, perhaps even through a split. x.comÂ
MGM Resorts could respond to a dropped buyout bid with an aggressive buyback before the market sizes its Japan opportunity. The stock fell after the buyout bid was withdrawn, though the deal never made much sense. A $2 billion buyback, about 20-25% of shares outstanding, would not be surprising and could move the needle. x.comÂ
MGM Resorts' debt and operating leverage make its low free-cash-flow yield risky. A recession would make the situation very bad even if conditions otherwise look fine, and Diller is following the Liberty levered-buyback model. x.com x.com x.comÂ
Disney's improved fundamentals against a compressed P/E make the shares a coiled spring. Revenue is climbing 5-10% yearly, net income rose from $2 billion to $12 billion, and margins expanded while the stock has not reached a new all-time high in six years. That is a six-year discount with sixfold better fundamentals. x.comÂ
Barry Diller's non-binding ~$48-a-share offer for MGM Resorts via People Inc. is likely meant to put the assets in play and force a revaluation of a business Diller has repeatedly called significantly undervalued. Suvretta Capital puts base-case value near $60 a share on current assets alone, excluding the Osaka casino and Dubai licence optionality. The board, reviewing the offer, which has no expiry, is expected to reject it; the stock could then fall toward its pre-bid level near $37. x.comÂ
Disney is a value trap over the medium to long term, with no real reason to structurally re-rate. It can work as a tactical trade, to own when parks data is good and consumers keep absorbing price increases. That answers @ErnestWongBWM's case that parks are about 60% of profits and the stock trades below 15 times 2026 consensus EPS. x.comÂ
Nintendo sits on the most valuable IP catalogue in entertainment and still looks underpriced relative to Disney. The Super Mario Galaxy Movie's $372.5 million global opening weekend, the biggest of the year so far, shows that huge box office for video game IP films is the new normal. x.comÂ
MGM Resorts looks due for a bounce after falling nine weeks in a row, something it has done only once in 38 years, at the financial-crisis lows, and never ten. It has retraced much of the takeover bid from a couple of months ago and now trades about 13% below the $48.30 offer price, with RSI getting oversold. A higher bid is even possible. x.comÂ
Netflix's competition and valuation leave its risk/reward well behind other opportunities. It competes with Amazon, Disney, Apple and YouTube, while trading at about 20x next-twelve-month earnings for roughly 14% annual EPS growth over the next few years. It is mostly a great company, but these numbers do not make it a multibagger. x.com x.com x.com x.comÂ