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Seaworld shares plunge on lower earnings and animal welfare concerns

Seaworld Entertainment, the family- oriented aquatic theme park and amusement park business, reported a sluggish second quarter and the results have sent its common stock into free- fall, according to a Wall Street Journal story published August 13, 2014.

Seaworld reported second quarter 2014 profit of $37.3 million or 43 cents per share on revenues of $405.2 million. The revenues were slightly lower than the second quarter of last year when company sales totaled $411.3 million. Earnings were better than the second quarter of last year, when Seaworld lost $15.9 million or 18 cents per share. But the 43 cents per share was more than 28 percent less than the 60 cents per share analysts expected and it is one of the contributing factors to today’s stock price decline.

Disappointing earnings, however, is not the only reason Seaworld common shares are in the dumps. Another reason is the media talk and animal’s rights activism surrounding Seaworld’s treatment of killer whales.

"The company believes attendance in the quarter was impacted by demand pressures related to recent media attention surrounding proposed legislation in the state of California," SeaWorld said in its second quarter earnings release.

What Seaworld is referring to is proposed legislation in the U.S. House of Representatives. Two California reps proposed a federal study on the potentially negative effects of keeping animals captive at entertainment facilities such as Seaworld. The concern is that the captivity could have lasting negative effects on the animals and if it does, then it could warrant stronger federal regulation of such businesses.

In addition, animal rights activists have pressured Seaworld to discontinue its orca attractions and have called for a boycott. Seaworld claims that the welfare of its animals is very important but refuses to discontinue its orca and other shows.

In yet another potential blow to the business, Southwest Airlines ended its shared marketing arrangement with Seaworld. Southwest claims its move was strictly business, but it is known that animal rights activists had been pressuring Southwest to end its relationship with Seaworld due to the latter’s involvement with alleged animal cruelty.

Seaworld plans to implement a share buyback program and plans some cost cutting measures as well as new attractions to win back customers. The announcements haven’t been sufficient to tame the bears on Wall Street, however, as the stock sunk to a 52- week low today, falling more than 30 percent in midday trading.

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