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Why Six Flags Entertainment's Shares Plunged 16.7% Today

By Travis Hoium – Updated Apr 22, 2019 at 3:49PM

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China was a thorn in Six Flags' side in the fourth quarter.

What happened 

Shares of theme park company Six Flags Entertainment (SIX 0.89%) dropped as much as 16.7% in trading Thursday after the company reported fourth quarter 2018 results. At 12:30 p.m. EST, shares were still down 12.7% on the day. 

So what

Revenue was up 5% to $269.5 million in the quarter, but net income dropped 19% to $79.4 million, or $0.93 per share. Revenue fell short of the $285.2 million that analysts expected, but earnings easily topped estimates of $0.28 per share.

Riders on a roller coaster on a sunny day.

Image source: Getty Images.

There was an unfavorable revenue adjustment of $15 million due to delays in the opening of a theme park in China. The delays were blamed on the macroeconomic environment in the region, which may limit long-term growth in Asia. 

Check out the latest Six Flagsearnings call transcript.

Now what

The revenue miss seems to have alarmed investors, but this was Six Flags' ninth consecutive year of record results. That's a trajectory any investor should like, and the fact that guest spending was up 2% in 2018 is a strong sign for the business going forward. Fundamentally, there isn't anything wrong with Six Flags as a business, even if its stock is suffering because of a revenue miss today.

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool is short shares of Six Flags. The Motley Fool has a disclosure policy.

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