Amid all the economic concerns as of late, it is hard to imagine a company like Six Flags pleasing investors with fresh financial data. A simple glance at the 52-week chart explains why this company has been drawing eyes - how did a company with a market value of over $1 billion find itself treading under $100 million just a few weeks ago? With Shapiro and his gang at the reigns of Six Flags, expect some changes to be occurring both in the books and at the parks.

The Business Breakdown

Six Flags is part of a cyclical entertainment industry that draws in the majority of the company’s annual profits during the summer months. Essentially, July represents 30% of the business and August is 20%. Revenue is mainly divided into admissions (55% in 2007), in-park spending such as food and merchandise (43%), and sponsorship, licensing, and other fees (2%). Six Flags does not face much direct competition, but they lack strong pricing power as seen by the dip in 2006 attendance following an increasing in admissions prices.

Beating Expectations

Increased gas prices combined with lackluster consumer spending data have pushed a forceful sell-off this year in Six Flags stock and have obviously created an extremely difficult environment for Six Flags to operate under. Investors logically reasoned that less discretionary money on the table translated to fewer tickets and thus fewer profits for Six Flags. “People need to stop obsessing about attendance,” says Shapiro in the second quarter conference call. Aside from his theory that higher gas prices encourage penny-packing families to take an outing closer to home, he has proved that they do not need to completely rely on attendance growth. Second quarter attendance numbers fell 3% from the year before, but more importantly, total revenue increased 1% thanks to a whopping 55% boost in sponsorship and licensing revenue. Third quarter also reported to be off to a great start with 7.6% revenue increase.