Can Theme Parks Bounce Back in 2025?

Industry Overview - The theme park industry is preparing for a recovery year after a mixed performance in 2023, with leading operators like Six Flags, Walt Disney, and SeaWorld showing stock movements but not outperforming the market [1][2] - The merger between Cedar Fair and Six Flags was completed last year, with the new entity retaining Cedar Fair's name but adopting Six Flags' ticker symbol [2] Financial Performance - Comcast reported a decline in profitability for its theme parks business, with flat year-over-year revenue growth [3] - Six Flags and United Parks are set to announce earnings soon, with Six Flags being viewed as a more interesting investment opportunity due to its potential for scalability and cost synergies [4][5] - United Parks has struggled with negative revenue growth in four of the last six quarters, failing to achieve significant top-line growth [4] Market Dynamics - The new Six Flags aims to optimize its larger collection of thrill parks, expecting to realize an annualized run rate of $120 million in cost synergies by the end of the year [5] - The industry is seasonal, with most parks starting operations as the weather warms, while some locations like Southern California operate year-round [6] Consumer Engagement - The success of the theme park industry in 2024 will depend on consumer turnout, with expectations that new attractions and expansions, such as Comcast's Epic Universe, will draw visitors [14] - Six Flags has introduced a new season pass structure, allowing access to both Six Flags and Cedar Fair attractions, which could enhance its value proposition [15] Investment Outlook - Six Flags is currently trading at 14 times projected earnings, but high debt levels increase the enterprise value multiple closer to 25, indicating potential for earnings growth if cost synergies and attendance exceed expectations [16]