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Why Six Flags Entertainment's Shares Plunged 16.7% Today

What happened

Shares of theme park company Six Flags Entertainment (NYSE: SIX) dropped as much as 16.7% in trading Thursday after the company reported fourth quarter 2018 results. At 12:30 p.m. EST, shares were still down 12.7% on the day.

So what

Revenue was up 5% to $269.5 million in the quarter, but net income dropped 19% to $79.4 million, or $0.93 per share. Revenue fell short of the $285.2 million that analysts expected, but earnings easily topped estimates of $0.28 per share.

Image source: Getty Images.

There was an unfavorable revenue adjustment of $15 million due to delays in the opening of a theme park in China. The delays were blamed on the macroeconomic environment in the region, which may limit long-term growth in Asia.

Now what

The revenue miss seems to have alarmed investors, but this was Six Flags' ninth consecutive year of record results. That's a trajectory any investor should like, and the fact that guest spending was up 2% in 2018 is a strong sign for the business going forward. Fundamentally, there isn't anything wrong with Six Flags as a business, even if its stock is suffering because of a revenue miss today.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool is short shares of Six Flags. The Motley Fool has a disclosure policy.

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