The Six Flags Entertainment Corporation had their shares drop by 19% on Friday, January 17, 2020. This follows after the amusement park confirmed that they’d face revenue declines in the third and fourth quarter of 2020. It’s anticipated that they’ll lose upwards of $10 million in profits, bringing the year-end earnings to $25 million maximum. This is considerably lower than profits earned by SFEC in years past, which follows after North American theme parks continue to experience lower attendance volumes. Seasons pass percentages have been the weakest since 2001.
Six Flags Entertainment Corporation has suffered from unforeseen circumstances. The corporation focused on growing its international investments, specifically in China. Unfortunately, their partnership in china defaulted on its obligations for payment. This caused for Riverside Investment to be sued profusely by Six Flags Entertainment Corporation, with their Chinese parks going into bankruptcy.
Representatives from Six Flags confirmed that the 2019 fourth quarter wouldn’t see any profits or revenue from their Chinese subsidiaries, with international agreements being broken. It’s anticipated that $1 million will be lost from these prior agreements, which they’d hope to offset with increased sales in America. There will also be a dismissal charge of $10 million from the Chinese government, which will avoid any potential litigation moving forward. Recovering from the $11 million lost and lower revenues in America is prompting Six Flags to reformat themselves company-wide.
The growth of international programs was supposed to be the catalyst that saw Six Flags become a multi-billion dollar corporation. That is still possible with new deals in place for Saudi Arabia and Dubai, which would be two locations that could see substantial profits rank in for SFEC. However, Six Flags cannot provide the associated costs for development or license. This extends to the management costs, which will require six flags to inquire additional investors. Subsequently, revenues will become lower. It now becomes a question of brand growth over financial growth for the Six Flags Entertainment Corporation.
Six Flags History
This first iteration of the Six Flags Theme Park began in Arlington, Texas. The pack started construction in 1957 ad opened their doors during 1961. Since that first year, SFEC has seen continued expansion across America, with twenty-six parks maintained in the United States. Collectively, there are more than nine-hundred rides offered by SFEC. To date, their highest rate of revenue was $1.5 billion, with more than fifty thousand employees. It should be noted that throughout the 2000s, this corporation suffered from declining profits but was able to re-invent themselves. It’s expected they’ll do the same thing for a second time.