What happened
Amusement park stocks fell on Monday, as rising COVID-19 case counts threaten to derail the beleaguered industry's recovery. By the close of trading, shares of SeaWorld (SEAS +4.47%), Six Flags (SIX +0.00%), and Cedar Fair (FUN +0.00%) were down 9.8%, 7.6%, and 4.1%, respectively.
So what
Nearly 1 million people have died from the coronavirus, including approximately 200,000 Americans. Surging COVID-19 cases in several European countries threaten to drive those figures even higher. Government officials, desperate to minimize the spread of the virus, are considering new lockdown restrictions.
More COVID-19 cases could mean more trouble for amusement park investors. Image source: Getty Images.
None of this bodes well for amusement park companies, who rely on huge crowds funneling into their rides and attractions to generate a profit. The industry has been devastated by coronavirus-related park closures and reduced crowds during its key summer season. Now, a new wave of COVID-19 cases threatens to derail park operators' upcoming Halloween festivities.
Now what
Six Flags, Cedar Fair, and SeaWorld have all suffered heavy losses in recent quarters. Capacity restrictions and increased coronavirus-related cleaning and safety expenses are likely to continue to weigh on their profits in the quarters ahead. And if fears of getting sick lead more people to steer clear of amusement parks in the fall, the industry's struggles could be even worse than feared.
For these reasons, Six Flags, Cedar Fair, and SeaWorld are likely to remain high-risk stocks until a safe and effective vaccine or treatment for COVID-19 is developed.
