What happened

Shares of Six Flags Entertainment (SIX -0.71%) dropped like a rock on Thursday, hitting new 52-week lows, after the company reported financial results for the second quarter of 2022. As of 11:30 a.m. ET, Six Flags stock is down 23%.

So what

Investors seem to be most troubled about attendance at Six Flags' theme parks. The company's Q2 ended on July 3, and attendance for those three months was down 22% when compared to the same three months of 2021. Attendance for the entire first half of the year was also down 16% from the comparable period of 2021.

To be fair, Six Flags' new CEO, Salim Bassoul, has expressly stated that lower attendance is surprisingly the goal. The company wants to move away from discounting and charge higher prices to reduce guest attendance. By having smaller crowds, it hopes to make the experience better (with less time waiting in lines). And it also hopes to attract more affluent customers who will spend more on other items in the park, boosting Six Flags' profitability.

With this context, it was encouraging that total guest spending per capita in the first half of 2022 was up 26% year over year to $66.21. 

Now what

Attempting to go against conventional wisdom with park attendance and turn Six Flags into a premium product is a bold, out-of-the-box move for Bassoul. In today's press release, Bassoul said this was "a transitional year" and that he'd found encouragement in higher guest satisfaction scores. But it should be noted that the strategy isn't paying off yet considering Q2 revenue was down 5% from last year and net income was down 36%.

However, at just 10 times its trailing earnings, Six Flags stock is now trading at a cheap valuation. This could mitigate further downside and allow shareholders to patiently wait and see if Bassoul's vision comes to fruition.