Stocks of theme park giant Six Flags Entertainment plunged 18 percent late Thursday, putting the operator on course for a seven-year low, after it backpedaled to a shock fourth-quarter drop.
Releasing a downbeat guidance and cutting dividend, Six Flags gapped lower and continued the plunge that has shaken the company since the mid-2018. Analysts have noted a series of price gaps since September last year, as Wall Street investors aggressive sold their shares.
The company gave a 2020 forecast well below consensus estimates due to the latest quarter's unexpected drop, as the operator struggles to attract customer to its amusement parks and was forced to halt its expansion plans in China.
Over 7 million shares had changed hands around early afternoon, approximately 4.5 times in the 65-day average volume, as venture capitalists reacted to sluggish gate receipts, weak admissions expenditures and other negative statistics.
Moreover, Six Flags disclosed that it is facing huge challenges in connection to its base operations and warned that weak organic profit trends as well as ballooning operating cost, mainly related to increasing minimum and market wages, will be hard to overcome this year.
Janney Consulting analyst Tyler Batory said, in a note to clients Thursday, that "nobody thought it could get worse, but it just did," referring to Six Flags' shock decline. Batory gave the company's stock a 'Neutral' rating.
The Grand Praire, Texas-headquartered amusement park operator reported a total loss of $11.17 million, or 13 cents per share, after sales of $79.3 million, or 93 cents per share, in the year-ago quarter. The FactSet consensus was for an earnings per share of 14 cents.
On average, analysts surveyed by Thomson Reuters projected Six Flags to release earnings of $0.15 a share on $260.11 million revenue. Analysts' expectations typically exclude special items.
For fiscal 2020, Six Flags adjusted its EBITDA to a range of $435 million to $465 million. The company's board of directors suggested a minimal first quarter cash dividend of $0.25 per common share, down from $0.83 a share previously.
Total profits plunged 4 percent to $261 million from $269 million in the final quarter of 2019, largely as a result of a 3-percent drop in attendance as well as a 1 percent slide in corporate sponsorship, international deals, and sales in bookings and accommodations.
The figures include charges in line with development contracts in China that were revoked after a Chinese investor defaulted, but the operator acknowledged setbacks at its main US operations which exclude international businesses and six US theme parks that started operating since 2018.
