With a combined total of 51 Amusement and Theme Parks located in the United States, Cedar Fair Lp (NYSE: FUN), Six Flags Entertainment Corp (NYSE: SIX), and Seaworld Entertainment Inc (NYSE: SEAS) were three stocks on my watchlist as an undercurrent to the traditional financial media reopening airline and cruise line stocks. It was not that I did not think that airlines and cruise lines would recover; it was more that I thought the media showered too much attention in one section of the market. I was not optimistic regarding Airline stocks specifically was discussed in Airlines Said We Are Open, the Only Issue- They Forgot Their People and How To Clear The Process? In addition, I was not optimistic about cruise lines because of one global event documented by Lauren Smiley for Wired in 27 Days in Tokyo Bay: What Happened on the Diamond Princess.
Instead, I was optimistic that amusement and theme parks, especially U.S.-based theme parks, would benefit from a reopening economy as traveling by car offered better risk management. With properties in the three of the most populous states of the United States- California, Texas, and Florida, theme parks operated by Seaworld Entertainment Inc, Six Flags, and Cedar Fair appear as attractive avenues for enjoyment and engagement after a year of restrictions at a manageable price. Before comparing share price performance, I think it is essential to review some basics from their recent financial results.
Company Earnings Highlights-
Six Flags Second Quarter Fiscal Year 2021
From Arlington, Texas, the company reported Second Quarter Fiscal Year 2021 Results on July 28, 2021, in which the company registered $459.79 million in Total Revenues and $70.52 million in Net Income. Diluted Earnings Per Share of $0.81 beat a street loss estimate of $0.086. Compared to Q2 19, Total Revenues and Net Income for 2021 were down 3.65% and 11.32%. Additionally, Park Admission Revenues was down 2.91% compared to Q2 19. Attendance in Q2 21 was 8.56 million compared to 433,000 in Q2 20 and 10.51 million in Q2 19. In addition, the company registered 4.2 million traditional season pass holders in Q2 21 compared to 1.7 million in Q2 20 and 3.5 million in Q2 19. According to the press release, “As of May 29, the company had opened all its parks, and, as of June 15, none of the parks were subject to mandated capacity constraints, with the exception of the theme park in Montreal and the two parks in Mexico.”
Cedar Fair Second Quarter Fiscal Year 2021
From Sandusky, Ohio, the company reported Second Quarter Fiscal Year 2021 Results on August 04, 2021, in which the company registered $224.14 million in Net Revenues and $58.87 million in Net Loss. Diluted Loss Per Share of $1.04 beat a street loss estimate of $1.308. Total Revenues for 21 were down 48.61% from $436.19 million in 2019. In addition, Park Admission Revenues for Q2 21 fell 56.87% compared to Q2 19. Attendance in Q2 21 was 3.41 million compared to 38,000 in Q2 20 and 8.5 million in Q2 19. According to Cedar Fair President and CEO Richard A. Zimmerman, “All Parks Now Open.”
SeaWorld Entertainment Inc, Second Quarter Fiscal Year 2021
From Orlando, Florida, the company reported Second Quarter Fiscal Year 2021 Results on August 05, 2021, in which the company registered $439.78 million and $127.76 million in Total Revenues and Net Income. Diluted Earnings Per Share of $1.59 comfortably beat a street estimate of $0.253. Total Revenues and Net Income for Q2 21 grew 8.32% and 142.66% compared to Q2 19. In addition, Park Admissions Revenues grew 6.76% from $227.83 million in Q2 19 to $243.22 million in Q2 21. Attendance in Q2 21 was 5.81 million compared to 272,000 in Q2 20 and 6.46 million in Q2 19. According to the press release, “As of June 30, 2021, all the Company’s parks were open and operating without COVID-19-related capacity limitations.”
How Have The Shares Performed For 2021?
The following index starting at 100, depicts the price performance of Cedar Fair Lp (NYSE: FUN), Six Flags Entertainment Corp (NYSE: SIX), and Seaworld Entertainment Inc (NYSE: SEAS) starting January 01, 2021, to market close as of August 12, 2021.
Seaworld Entertainment Inc is the clear outperformer, with Six Flags and Cedar Fair in second and third among the three park operators. Six Flags, a Standard and Poors 400 component, is barely performing better than the index. On the other hand, Seaworld Entertainment Inc, a Russell 2000 component, handily outperforms its index and other comparisons. For the year, Seaworld Entertainment Inc is up 69.75%, Six Flags up 28.89%, and Cedar Fair up 11.13%, with the Russell 2000 and Standard and Poors 400 up 15.32% and 20.62%, respectively.
Possible Explanations for Seaworld Entertainment Inc Outperformance
How Watching TV During the Lockdowns Helped?
In the 2020 American Time Use Survey from the Bureau of Labor Statistics, of the 5.53 hours Americans 15 years and above spent on all Leisure and Sports Activities, Americans spent an average of 3.05 hours watching TV, up 11.31% from 2019. Thus, the pandemic diverted and, in some cases, entirely terminated regular activities and glued our collective attention to television screens playing hours of content from traditional cable networks and streaming platforms like Netflix, Youtube, Disney, Prime Video, etc.
I would like to parallel the BLS survey results with two other exciting remarks. First, on April 20, 2021, Linley Sander, Senior Data Journalist at YouGovAmerica, published that, “An Economist/YouGov poll shows that one-third of US adults say that they have smoked marijuana (33%).” Second, Emma Marris for The Atlantic on April 12, 2021, published The Nature You See in Documentaries in Beautiful and False, in which she points out, “Nature documentaries have never been more popular, in part because they offer easy escapism during a rough time, and in part because marijuana has been legalized in much of the United States.”
I propose that nature documentaries are why an establishment like Seaworld Entertainment Inc has seen a rebound in attendance numbers compared to Six Flags and Cedar Fair. Compared to Q2 19 Total Attendance, Seaworld Entertainment Inc Q2 21 attendance was down 18.15%, 3.78%, and 46.61% better than Six Flags and Cedar Fair. There are no live-action roller coaster documentaries that I am familiar with, and if there were, it would be a generic documentary. However, after browsing through catalogs of everyday content, from movies to limited-series shows to cartoons, viewers might have stumbled upon nature documentaries gravitating attention later translating to attendance. Research from Darío Fernández‐Bellon, of the School of Biological, Earth and Environmental Science (BEES), University College Cork, finds that “natural history films can provide vicarious connections to nature and can generate durable shifts in audience awareness beyond the broadcast of the show.” Using Twitter and Wikipedia page activity, Fernández‐Bellon evaluates the propensity of Planet Earth 2 among the U.K population. While the population in focus for the study was the United Kingdom, a similar thesis can be applied and decoded from the stock price performance of Seaworld Entertainment Inc against Six Flags and Cedar Fair.
Data Says Better Revenue Per Attendee
The following chart was created using data from the available 10-Q statements on EDGAR Company Filings. The chart compares Total Revenues (Bars, Left Y-Axis) generated for the first six months of the fiscal year against the Total Number of Attendees (Line, Right Y-Axis).
Even though Six Flags has more attendees, Seaworld Entertainment Inc generated more revenue, translating to a better revenue/attendee metric. As of Q2 21, the Total Revenue Per Attendee for Seaworld Entertainment Inc, Six Flags, and Cedar Fair were $76.24, $54.76, and $68.61, respectively. In Q2 19, Seaworld Entertainment Inc was $63.92, Six Flags at $47.76, and Cedar Fair at $52.01. Between Q2 11 and Q2 21, Total Revenue Per Attendee grew 58.23% for Cedar Fair, 30.26% for Six Flags, as Seaworld Entertainment Inc grew 27.41% between Q2 12 and Q2 21.
At the beginning of 2021, I was convinced that tourism via air travel would be bumpy to recover at best. I was optimistic that amusement and theme parks, especially U.S.-based theme parks, would benefit from a reopening economy as traveling by car offered better risk management. Drawing comparisons between Cedar Fair Lp (NYSE: FUN), Six Flags Entertainment Corp (NYSE: SIX), and Seaworld Entertainment Inc (NYSE: SEAS) showed that simply having a theme park wasn’t convenient. An argument presented is that hours of nature documentaries consumed on TV translated to a rebound in attendance and stock price performance.