What happened
Amusement park stocks fell on Wednesday, as states across the country reported higher COVID-19 cases. By the close of trading, shares of Six Flags Entertainment (SIX -0.50%), Cedar Fair (FUN -1.14%), and SeaWorld Entertainment (SEAS) were down 6.7%, 6.3%, and 5.5%, respectively.
So what
At least 19 states are dealing with rising coronavirus cases. That's forcing health officials in some areas to activate emergency plans to contain the spread of the potentially deadly disease.
Rising COVID-19 cases counts could keep amusement parks empty. Image source: Getty Images.
Meanwhile, Six Flags, Cedar Fair, and SeaWorld are all moving to reopen their parks. The major amusement park operators were forced to close their facilities in March because of the coronavirus pandemic and related stay-at-home directives. With their ability to generate revenue compromised, they've been suffering mounting losses.
Now what
Six Flags, Cedar Fair, and SeaWorld are all planning to limit the number of visitors who can enter their parks for a period of time after they reopen, to comply with social distancing guidelines. They'll also increase cleaning routines and implement other safety-related measures, such as requiring guests to wear masks and even have their temperature checked in some locations.
However, amusement parks are built around the idea of funneling large crowds into their gates. If rising coronavirus infections and fears of getting sick make people avoid large gatherings, the major amusement park companies could see their traffic levels fall well below their already reduced levels. And this could remain the case until a vaccine or effective treatment for COVID-19 is developed.
For these reasons, Six Flags, Cedar Fair, and SeaWorld remain high-risk investments.
