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SeaWorld Stock Earnings Beat Remains Threatened by Blackfish Legacy

Investors should be wary about further animal rights allegations hurting SeaWorld stock

Investors should be wary about further animal rights allegations hurting SeaWorld stock

Source: Jeremy Thompson via Flickr (Modified)

Back in 2013 a documentary called “Blackfish” came out criticizing SeaWorld Entertainment (NYSE:SEAS) for mistreating the orcas housed at its theme parks. The backlash caused a dramatic drop in the park’s traffic which in turn took SeaWorld stock as low as $10.80 per share over over the ensuing four years.

However, SeaWorld stock has seen a marked improvement so far this year, especially over the past six months as its earnings results start to look healthier.

Strong Second Quarter

On Monday, the aquatic park released stellar second quarter results which took the stock 20% higher. Attendance was up nearly 5% across all of the firm’s parks and SeaWorld stock beat on both EPS and revenue. The good news came despite poor weather conditions at several park locations and the fact that the Easter holidays fell during the first quarter rather than the second this year. 

Some of the attendance improvements were attributed to the firm’s free beer promotion at its Tampa and Orlando parks. The limited time offer attracted higher than normal attendance figures and as a result the company is planning to roll out similar promotions this quarter at Sea World San Antonio as well as at both of its Busch Gardens parks in Virginia and Tampa Bay.

SeaWorld CEO John Reilly said the firm expects to see attendance continue to rise as the firm continues to upgrade its attractions with new rides and events and that the company’s strategic pricing strategies were helping to attract season pass holders.

Reilly was also optimistic about park attendance moving forward, saying that the park is expecting to surpass the assumed 1% industry growth and win back the 25% losses that SeaWorld has experienced since “Blackfish” came out. 

The company has been trying to divert attention away from its Orcas in order to reposition the company as a fun, educational attraction and those efforts appear to be paying off. Back in 2016 the park promised to phase out its Orca breeding program after one of its trainers was killed. 

Blackfish Still Is a Threatening Black Cloud

While it appears the public is starting to come back around to SeaWorld and the effects of Blackfish are starting to wear off, investors should be cautious as animal activists continue to take aim at the park.

People for the Ethical Treatment of Animals (PETA) says the park hasn’t changed its ways and that its breeding and training programs are still sub par.

The organization admitted that those attending SeaWorld are under the impression that the park has improved conditions for its dolphins and whales, when in fact the animals are still forced to live in tiny concrete tanks and are sometimes forcibly impregnated. 

What to Believe

The real question for investors is whether or not another Blackfish incident will rear its head as the company gets its attendance figures back on track. There’s no denying that SeaWorld stock has benefitted massively from the company’s efforts to win over the public with new attractions and competitive prices.

The fact that Disney (NYSE:DIS) recently raised its own prices has helped SeaWorld further by positioning the park as a more affordable option.

However, much of Sea World’s success will depend on whether or not the firm is able to completely overcome the stigma that Blackfish attached to its theme parks.

It appears that the company has been able to convince its customers that conditions are improving, but whether or not they are is another matter. If SeaWorld gets caught up in another PR nightmare regarding its animals, I’m not sure the public will be so willing to forgive.

The Bottom Line on SeaWorld Stock

SeaWorld stock appears to be riding a wave of free beer back into the public’s good books, but whether or not that will continue is shaky. Because the park wasn’t forthcoming about the effects of Blackfish, investors should be wary to trust the company’s claims that it is improving conditions for the animals and won’t be the center of controversy moving forward.

However, if the firm is able to successfully transition attention away from its Orca displays an onto other attractions and rides, SeaWorld could be completely out of the woods. At the moment, the whales and dolphins remain one of the park’s largest draws, so any controversy surrounding their treatment would have a massive impact on the park’s success.

As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities. 


Article printed from InvestorPlace Media, https://investorplace.com/2018/08/seaworld-stock-threatened-blackfish/.

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