FUN Stock Falls 25% in 3 Months: Will the Downfall Continue?

Core Viewpoint - Six Flags Entertainment Corporation (FUN) has significantly underperformed in the market, losing 24.7% over the past three months, while the leisure and recreation services industry grew by 42% [1]. Financial Performance - The Zacks Consensus Estimate for Six Flags' 2024 earnings has decreased from $2.25 to$2.08 per share, indicating a 27% decline year-over-year [3]. - The third-quarter earnings estimate also fell from $3.22 to$3.07 per share, reflecting a 27.1% year-over-year decline [3]. Demand and Attendance Issues - The company is experiencing soft demand patterns due to a shift in consumer spending towards non-discretionary items and savings, influenced by macroeconomic trends [4][5]. - Attendance dropped by 2% in Q2 2024 compared to the previous year, attributed to fewer operating days and the earlier timing of the Easter holiday [6]. - For the five weeks ending August 4, 2024, attendance was 10.9 million, marking a 3% decline from the same period last year [6]. Cost and Expense Challenges - Six Flags has faced rising costs and expenses, with a notable $21.3 million attributed to merger-related costs from the merger with Cedar Fair, L.P. [7]. - In the first half of 2024, operating costs and expenses rose by 11.1$40.9 million increase in selling, general and administrative (SG&A) expenses, a $13.3 million rise in operating expenses, and a$5.9 million increase in the cost of goods sold [8].