The theme-park operator fell about 16% in its first full session after a rider was killed on the Goliath coaster at Six Flags Over Georgia. The company has closed nine similar coasters at six parks with no reopening date, in the middle of its Halloween season.
Nine roller coasters at six Six Flags parks were closed on Tuesday after a rider died in Georgia, and the company has given no date for reopening them. In the first full session since the incident, its shares lost about a sixth of their value.
By early afternoon Six Flags Entertainment traded near $9.98, about 16% lower, a level that would be the stock's weakest finish since 2009. The stock had closed Monday at $11.92, up 4.5%, a gain recorded before news of the incident reached the market. Rival park operator United Parks & Resorts was down 0.3%, and the consumer-discretionary sector was flat.
The incident and the closures
The Goliath coaster at Six Flags Over Georgia, outside Atlanta, was the scene of the death late Monday afternoon, and several other riders were injured. Police in Cobb County have opened an investigation and have not said what went wrong.
The company said "out of an abundance of caution, we have temporarily closed similar attractions across our parks." Nine coasters at six parks are affected, including Raging Bull at Six Flags Great America in Illinois, Goliath at Six Flags Magic Mountain in California, Nitro at Six Flags Great Adventure in New Jersey, Fury 325 and Thunder Striker at Carowinds in North Carolina, Orion and Diamondback at Kings Island in Ohio, and Leviathan and Behemoth at Canada's Wonderland. Eight of the nine were built by the Swiss manufacturer Bolliger & Mabillard, which also built the Georgia ride. Magic Mountain's Goliath came from a different Swiss firm.
There is no reopening date for any of them.
The timing
The closures come in October, when Halloween events draw large crowds and marquee coasters help sell admission and season passes. The company reports third-quarter results on Nov. 5.
The backdrop
The decline lands on a stock already under pressure. Activist investor Jana Partners, which with co-investors holds about 9% of the company, urged Six Flags in September to hire an investment bank and explore a sale, citing disappointment with second-quarter results. The company had already sold several parks it considered noncore and closed another.
On Sept. 29 the company's Southern California park retired its X2 coaster for good. Several lawsuits tie that ride to serious injuries.
Market implications
One reading is that the decline reflects a temporary loss of capacity. Should the cause turn out to be peculiar to the Georgia ride, the closed coasters could be back in service quickly, limiting the damage to part of the Halloween season.
A second reading is that the costs will run longer. Until investigators explain the death, nobody can size the lawsuits, the insurance bill or the cost of modifying nine rides, most of them from one supplier, and two safety-related closures within a fortnight could keep visitors away.
What to watch
Police findings, a date for the coasters to reopen and October attendance in the Nov. 5 quarterly report will set the stock's next leg. Any response from the board to Jana's call for a sale is a separate catalyst.
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