*‘Taps’ plays in the background as Six Flags CEO Michael Spanos lowers all six flags to half-mast*
No, a Ferris wheel didn’t maim a gaggle of grade school kids a la RollerCoaster Tycoon…
Even worse… Six Flags stock plummeted more quickly than the Kingda Ka on Friday when news broke that the theme park’s efforts to expand in China have hit a roadblock which could lead to the cancelation of all projects in the nation.
Its Chinese development partner, Riverside Investment, has struggled due to the declining real estate market in China and the macroeconomic environment *cough trade war cough*, which has caused it to default on payments to Six Flags.
If SIX cannot convince Riverside to get its sh*t together or find another development partner to continue these efforts, the amusement park company stands to lose a boatload of expected revenue from the Chinese market.
No help stateside
Red, white and blue-blooded Americans haven’t helped much either. Attendance stateside fell due to lower season pass and membership sales during the holiday season, which reduced Q4 revenue by $8M to $10M compared to the year-earlier period.
But look at the bright side, Six Flags, it could be worse… you could be SeaWorld…
The bottom line…
SIX stock hit its lowest intraday level since October 2014, dropping 19% to $35.28, before closing down 17.82% on the day.
According to a Janney Montgomery Scott analyst, who cut his recommendation from buy to neutral, the China and North American warnings are clear indicators that the core business continues to deteriorate and the dividend could be at risk. Woof.