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Why Shares of Vail Resorts Wiped Out on Friday

By Travis Hoium – Updated Apr 16, 2019 at 11:28PM

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Warm weather hits the mountains once again.

What happened 

Shares of mountain resort giant Vail Resorts (MTN 0.50%) fell as much as 15.2% in trading Friday after the company announced weak results from the holiday season. Shares came off their 52-week low slightly but were still down 12.6% at 11:30 a.m. EST.

So what

Season-to-date total lift ticket revenue was up 12.2% from a year ago, ski school revenue rose 9.5%, and dining revenue was up 14.8% on a 16.9% rise in the number of skiers. But management said that the preholiday season from December 1 to December 21 was lower than anticipated as poor conditions and weaker-than-expected short-term bookings hit the company. 

Mountain resort development in the winter.

Image source: Getty Images.

Management also said that EBITDA for fiscal 2019 would be below the guidance given in September 2018. That guidance was for between $718 million and $750 million of EBITDA but assumed normal weather conditions.

Now what

Weather is always a risk factor for mountain resorts, and this year has once again been unusually warm. The good news is that Vail has transitioned its business to be focused on season-pass sales, which lock in season revenue before snowfall even starts. But if the warm weather continues in the mountains, we may see customers be a little less excited about buying a season pass in the coming years, which is the biggest long-term risk for the company.

Check out the latest Vail Resorts earnings call transcript.

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool recommends Vail Resorts. The Motley Fool has a disclosure policy.

Stocks Mentioned

Vail Resorts Stock Quote
Vail Resorts
MTN
$258.83 (0.50%) $1.29

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