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It’s up, it’s down, it’s up again.  Here’s a playbook for what promises to be a volatile month of trading.

What do you get when you mix high short interest, high leverage (operating and financial), transactions, depressed earnings, and a big valuation?  If you guessed stability, you lose! 

MGM will likely report earnings the first week of May.  We think it will be just ok.  Expectations seem to be pretty high though, particularly given the Street’s rate surveys and management’s RevPAR commentary.  We have little doubt that strong YoY convention activity drove rates meaningfully higher in Q1 but our concern is more on the casino side.  Street projections of mid-single digit growth in MGM’s Las Vegas casino revenue looks aggressive to us. 

Having said that, we are not too much below the Street for wholly owned Las Vegas EBITDA.  Our Q1 estimate is $225 million versus the Street around $235 million.  Whisper expectations may be higher and that is why we are concerned.  We will have a more detailed earnings preview out soon.

So stock is going down right?  Not so fast.  MGM Macau is humming and yesterday’s IPO announcement and deal with Pansy Ho is an overall positive.  Operating control should be good for MGM and good for the property.  Moreover, WYNN should report before MGM and we are expecting a huge quarter out of Wynn/Encore Las Vegas.  That should get investors juiced for MGM, given its significant Strip exposure.  However, we think WYNN will be the Vegas anomaly and MGM’s results may disappoint.