The oceans may be blue, but SeaWorld Entertainment (NYSE:SEAS) investors saw plenty of green last week. Shares of the theme park operator soared 15.5% last week after announcing an end to some of its more controversial practices.
SeaWorld is immediately suspending its orca breeding program. When Takara -- one of its killer whales that happens to be pregnant -- gives birth it should be the final orca born at any of the three marine life parks operated by SeaWorld Entertainment. This will be the last generation of killer whales at SeaWorld.
The whales won't be released into the wild. History hasn't been kind on that front. Read up on what happened to Free Willy star Keiko after he was released. It also wouldn't be good business for SeaWorld. Now the theme park operator can cut back on its shows -- they will end in San Diego later this year and the other two parks by no later than 2019 -- but still spend the next few decades with magnetic exhibits as the orcas die off naturally.
The market likes the development, of course. SeaWorld is coming as close as it feasibly can to meeting activist concerns. Ending the breeding satisfies the California Coastal Commission's biggest concern, and the Humane Society of the United States is voicing its support.
The venom's still out there. CNN aired Blackfish yet again over the weekend. Musical comedy theater MCL Chicago began the six-week run of Blackfish The Musical -- a parody of the documentary but also at the expense of SeaWorld -- earlier this month. It won't be long before the same activists badmouthing SeaWorld for its killer whales take the park operator to task for its shows starring dolphins, sea lions, and other marine life. However, the closer it aligns itself with zoos and other theme parks -- and last week's move does exactly that -- the easier it will be for SeaWorld's peers to have its back.
SeaWorld was already starting to bounce back. Attendance rose slightly in 2015. It was just a 0.3% uptick, but it's the first increase since 2012. Larger peers Disney (NYSE:DIS) and Universal parent Comcast (UNKNOWN:CMCSK.DL) (NASDAQ:CMCSA) are faring a lot better, but there's also something to be said about the success of Disney and Comcast attracting tourists to travel to Central Florida and Souther California where SeaWorld's two most popular parks happen to be.
Disney and Comcast have also been raising prices over the past month while SeaWorld's admissions have held pat, making it a more compelling value to travelers in the two touristy hotbeds. Consumers have fewer reasons to stay away from SeaWorld now, and apparently that also holds true for SeaWorld stock.