Six Flags Entertainment (SIX 1.08%) shareholders lost ground to a declining market this week as the stock fell 8% through Thursday trading compared to a 2% slump in the S&P 500, according to data provided by S&P Global Market Intelligence. The decline pushed the theme park operator further into negative territory for the year, down 33% so far in 2022.
It was partly powered by concern about a recession on the way, and partly by an operating update from the company.
Six Flags announced before the market opened on Thursday that sales jumped 68% in the first-quarter selling period that ended April 3. This good news was powered by several encouraging trends, including increased attendance, higher ticket prices, and higher spending per visit to its theme parks.
The first quarter is a relatively tiny part of Six Flags' year, though, as many of its parks remain closed during colder weather. Roughly three-quarters of its attendance occurs in the second and third quarter. And that's the period that has many investors worried right now, as inflation and rising interest rates raise the risk of a slowdown in consumer spending.
In a press release, CEO Selim Bassoul said Six Flags is in good shape for the upcoming seasonal spike, having spent cash recently upgrading its amenities, improving the food service, and hiring and training employees. "We have reoriented our culture to prioritize the guest in everything we do," Bassoul said.
Investors' fears are rising about a recession or a slowdown in consumer spending that might be approaching. The recent surge in inflation might convince people to look to less expensive entertainment options this summer, and perhaps scale back on some travel plans.
These issues aren't evident in Six Flag's latest earnings update. But the next few months will determine the course of its entire fiscal year. And that seasonal risk convinced many investors to move away from the stock at a time when worries about the broader economy are high.