Lately, it’s been rough waters for SeaWorld (SEAS). The main reason is a highly negative documentary, Blackfish, distributed on CNN. The film describes allegedly terrible treatment of the park’s killer whales. Yet this week SEAS got some good news — that is, the movie got snubbed by the Oscars when nominations were announced last week. As a result, SEAS stock rose about 9%.
Yet the spike in the stock does look like an overreaction. If anything, it could be more of a relief rally, which tend to be rather short-term trends.
Interestingly enough, I actually talked with the CEO of SEAS, Jim Atchison on Wednesday. He noted that the film was produced by animal activists and as a result, was very slanted. He said his company deeply cares about the animals and puts a big focus on their safety. In fact, the company has an animal rehabilitation program, which has rescued more than 23,000 animals.
But the movie has already had some negative effects on Sea World since its release. For example, a variety of performers have cancelled their gigs, including the Beach Boys, 38 Special and Willie Nelson.
However, the movie does not seem to have had much of an impact on attendance, as reported this week by SeaWorld. A record number of people came to the parks in the fourth quarter, and revenues also reached an all-time high, at $1.46 billion.
And going into 2014, the prospects still look promising. Jim mentioned that SeaWorld has been investing aggressively into new technologies, such as mobile apps, as well as new rides. He is also encouraged by the strength in the economy, which should spur more expenditures on travel.
But again, for those shareholders looking to buy SEAS, it probably is a good idea to wait. The recent rally is probably temporary — so you could probably get a better price if you hold off for now.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.