Six Flags Stock Price

With all of the focus over 2027 CapEx and the Aerie Force 1 drama, we haven't touched on the Six Flags Stock Price lately. Well, it's pushing its 52 Week Low as of this morning (9/15). Stock Price was $12.81 at time of writing, and the 52 week low is/was $12.51.

Obviously, there is bad economic news all around, so this latest price drop may be more Macro than Micro, and perhaps not an indication of the recent moves Six Flags has made. Honestly, I think they've done the right things with CapEx deferral, and some efforts to properly price Gate/Dining Plans/Add-ons/etc. Whether that provides the right mix in revenue increase and customer experience benefit is still to be seen.

However, global issues are going to hurt Six Flags in the near term:

1. Interest rates are going to go up
   1. this will hurt them and their borrowing costs
   2. this will hurt their customers as inflation and financing costs continue to increase
2. War in the Middle East continues (expands)
3. Gas prices are rising again (while this moves some from a Disney trip to a regional park trip, the long term effect of significantly higher gas prices is a problem for Six Flags' customer base
4. Potential oil shortage (Costco starting to ration motor oil in some warehouses) - this can't be good
5. US Mid-Term Elections - crazy stuff happens in the market when there is political change (or lack thereof) - this is a wild card

Sadly the company behavior is often driven by the stock price, and a sustained drop without recovery could cause activist investors to rear their heads again. It's not going to be pretty as we move into the off season. Let's hope that Spooky Season is profitable.

I forgot to add the following:

Six Flag's 3rd Quarter ends 9/30. They might use the lower stock price to flush through whatever remaining bad news there may be from the merger, or something else. I can't imagine there is much left to flush through from the merger, but there could be further reserves taken for other matters (park sales), etc. I suspect the 9/30 results will have some interesting "adjustments" as they take further actions to improve their balance sheet.

It's going to be a rough ride.

As someone who never knew much about stocks, many years ago, I bought Cedar Fair stock using the Robinhood app. I sold most of my shares a few years ago, realizing I was going to lose even more money in the long run. It's so stupid of me to have thought it would have been a profitable endeavor.

Which makes me ask this epic question about the theme park industry. I know that Disney and Universal are profitable, but why is Six Flags and the others in so much debt? Don't they know how to run a profitable business? Are they not potentially profitable? Are they not charging enough? Aren't enough customers not willing to pay more? Have they not found the sweet spot? All the money that goes into the business, you'd think they would be making money hand over fist anyway.

I just don't understand this basic principal about the theme park industry. Which makes the frequent discussions like this hard to understand.

Is this a huge question, or so simple I am overthinking it?

Its a bad investment.

They have way too much debt debt. Their business plan has been bad and still is bad. They only seek to regurgitate the same customers with no plan for actual growth.

Then there’s the pricing issue. Decades of under pricing has created a customer base that expects low prices. Attempts to raise prices will result in less customers.

Plus most of their assets sit dormant around half of the year not generating revenue.

As far as Disney/Universal being profitable, they have a much wider customer base. There are attractions for everybody in the world at those parks, not just thrill rides and children’s rides. They also have the infrastructure to operate year round. It’s not only their location that allows this. It’s the number of indoor attractions that allows this.

The SF parks don’t invest in the infrastructure to operate throughout the year and depend on children being out of school to operate. Bad business plan when the business depends on children being out of school.

Disney stock is down 7% this past year, down 41.5% the past 5 years. Universal is down 18% for the year, 6% the past 5 years.

None of them are good investments.

LostKause:

why is Six Flags and the others in so much debt? Don't they know how to run a profitable business? Are they not potentially profitable?

The capital costs of competing in the modern mega theme park business are practically impossible to recover. Both companies went into debt to invest in rides - probably beyond what they needed to. Legacy Six Flags did so more than Cedar Fair, but Cedar Fair was carrying a lot of debt into the merger, too.

And I would say (YMMV) that was driven by a publicly owned company needing to show growth, where as Mom & Pop Land could be happy paying themselves a salary, making 5% profits, and staying in business forever. Knoebels seems to be doing just fine. Same with Holiday World. Note that neither one of those places feels the need to buy a giant new attraction every year.

My dad used to say "Some businesses need to go bankrupt two or three times before they get valued correctly." We've seen that at least once with Six Flags and it seems almost inevitable that will happen again. The question is, will the bondholders that end up owning the company want to stay in the theme park business or sell it off for parts?

That's a real oversimplification of Six Flags' problem. Let's ignore the Universal and Disney comparison for the moment.

There's nothing inherently wrong with a seasonal amusement park business model. Especially one that has grown the season into the Haunt and (to some extent) Winterfest/Holiday in the Park months. I would point to the (apparently) successful Holiday World who have managed both capex investment and gate integrity over the years, and appear to be in the black. That seasonal park business model operated for years and provided moderate rates of return.

At some point SF and CF both, underpriced their gate, assuming they'd make it up elsewhere, and spent tons of money on Acquisitions (eventually of each other) using debt, for which they never paid down. CF, as a publicly traded Partnership returned most of its profits as dividends rather than paying down significant amounts of debt. One could say they should have done that before they got the bamboozled into the SF merger, but there are some tax implications there that are above this discussion).

Then they merged with SF (already a financial basket case) and well, they took a blow torch to their money.

Now, assuming you didn't have $8Billion in debt, the businesses themselves are primed to be profitable. Don't give away the Season passes, or cheap dining passes, charge a boatload for FOTL access so that those that will pay will pay, and that it doesn't deteriorate the experience for the general public who you are now making them pay market rate, etc. Upgrade the F&B, add more of the B (pure profit), add low cost festivals to the shoulder season (see note below about having a place to go for inclement weather).

As for the year round aspect that super7* mentioned, that's just not fair. Even in the LA market, Six Flags has had trouble running MM as a year round operation. And that's with near perfect weather 323+ days a year, and with only one indoor attraction and no large scale indoor dining/entertainment facility. You can't run an outdoor amusement park year round in Crappy Cincinnati, Chicago, New Jersey winter/early spring weather, (whether it's snow or just chilly rain). There is NO level of infrastructure that you could put into those parks to make true year-round operations viable. Yes, several of the parks should have invested in a Fest Haus (Harmony Hall) type of building, or MULTIPLE versions of those. To this day I don't understand why they haven't (looking at you Canada's Wonderland and Kings Dominion). In good weather it's AC to push dining or a show, in bad weather, it's the difference between whether I'll venture out (knowing I can warm up for a few minutes). What's worse is having an indoor theater facility (looking at you Kings Island) and not programming it with entertainment for the peak portion of summer. /facepalm

You're never going to have 4-5 massive dark ride type buildings like Disney. Even if you had them, it wouldn't make enough difference for the current "non-operating days" to get people in the door.

It doesn't mean the operations can't be profitable

Chasing growth in the regional park business is a total waste of time. No chain of parks has ever been able to do it in a sustained way outside of acquisition. Ironically, that's where some of Cedar Flags lingering debt comes from, the Paramount Parks buy.

Universal/Disney aren't great comparisons, because they're just part of larger media companies. They're a class unto themselves. That said, Disney's experiences division has been killing it, though some of their growth has been very linked to the cruise line.

This is from last October but is probably even more relevant today:

https://www.greenberggluske...k-closures

John Reilly is making business decisions to consolidate functions/jobs in Arlington, eliminating full-time careers in the markets the parks serve where family, friends, and communities know these (former) employees, hurting the loyal emotional connection to parks. John is blaming the legacy profitable company leadership for the problems of today. John has hurt the culture of pride and professionalism by gutting the things that contribute to high standards and quality. The entire company executive leadership and board are engaging in the same corporate behavior of the past few decades, behavior that forced Six Flags into bankruptcy twice.

John Reilly and the entire corporate board need to remember: 3 strikes and you’re out.

The stock got within $0.02 of its 52 week low today. News of additional headcount reductions will probably bolster the stock tomorrow, but I wouldn't expect it to make significant gains any time soon.

Now that it is several years in the past, it can be easy to overlook the devastation that Covid caused to operator's balance sheets.

In the case of SF + CF in 2020, they borrowed a collective 2 billion dollars. That was double what they'd typically borrow at that time- and it was done out of necessity to prevent total collapse in the event there was no revenue coming in at all in 2020. It wasn't a total wash out, but it was still catastrophic:

2019 combined revenue: $2.9B

2020 combined revenue: $538M

New Six Flags has a very concerning debt problem that is not really getting better. The only real move they've been able to make is selling off assets. CGA was not on the chopping block until Covid debt, of that I am certain. Ironically, debt has been a problem for original Six Flags for nearly twenty years, but in this most recent case, I don't fault management for taking the measures they did during the pandemic. Executive management certainly made mistakes, but I don't think we assign enough blame for this current mess to the right problem.

The timing of all these macro economic impacts in 2026 couldn't be worse. The stock price accurately reflects the reality that Six Flags might not make it.

I can't argue the specifics, but the park(s) were already overlevered before the COVID era. That drop in revenue can't be viewed without a similar drop in expenses, and related PPP reimbursements. Not saying COVID was a benign factor, just that those numbers as presented don't tell the whole story.

CGA was already heading for closure, and had been for a decade, certainly once the football stadium came to be. That stadium's impact on their ability to open on the best weather days of the year was a huge determinant. The change in lease status only cemented the decision.

The economy is effed thanks to the idiot in the White House. The AI bubble will burst, and when it does, trillions will be lost, and at the same time entire classes of jobs will be gone.

We are in for dark times, and the roller coasters and theme parks that we grew up with are about to become part of the detritus strewn along the road.

Yeah, I'm slightly negative on the future