Please ensure Javascript is enabled for purposes of website accessibility

Why Six Flags Stock Gained 60% in April

By Demitri Kalogeropoulos – May 5, 2020 at 3:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors piled back into the stock following brutal losses in the prior month.

What happened

Six Flags(SIX -2.37%) shares dramatically outperformed the market last month, soaring 60% compared to a 13% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally only erased a portion of shareholders' recent paper losses, though, with declines weighing in at 55% so far in 2020.

A roller coaster heading lower.

Image source: Getty Images.

So what

Investors became intensely pessimistic about the entertainment business following COVID-19 developments that forced closures of all of Six Flags' parks through most of the spring season. The shutdown has been generating significant financial pressure, which management has responded to by suspending the dividend and slashing costs.

Yet shares still rallied in April as Wall Street gained more confidence that the U.S. economy is on the verge of reopening, and potentially allowing for venues like Six Flags' parks to begin operating again through the summer.

Now what

On April 30, Six Flags announced plunging sales and expanded losses for the fiscal first quarter, which is a traditionally slow period in the industry. Management said at the time that its cash balances can easily support several months of paused operations. However, investors should approach this stock with skepticism as they wait for evidence that the consumer business can bounce back following the pandemic.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Six Flags Entertainment Corporation Stock Quote
Six Flags Entertainment Corporation
$17.70 (-2.37%) $0.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.