SeaWorld Entertainment Inc (SEAS): A Few Issues To Look Out For

Page 1 of 2

When you evaluate a publicly-traded business, it’s important to research the risks associated with it. Theme park SeaWorld Entertainment Inc (NYSE:SEAS) released the final version of its prospectus form 424B4 on the day before its initial public offering (IPO). In the risk section, you can find five risks that hint at the possibility that the 24% run up in stock price on Seaworld’s first day of trading may not last.

SeaWorld Entertainment Inc (NYSE:SEAS)

“Incidents or adverse publicity concerning our theme parks or the theme park industry generally could harm our brands or reputation as well as negatively impact our revenues and profitability.” – Prospectus, page 19

Anytime a business gets involved with large and exotic animals, the risk of injury or death of employees, customers, or suppliers always exists. When this happens, it spurs negative media coverage and causes customers to harbor second thoughts about attending parks such as Seaworld.

In 2010, an Orca whale killed a trainer in full view of visitors, according to a New York Times article. In the summer of 2013, you will see the release of a documentary called “Blackfish,” which details the death of a trainer.

Market players

“Because we operate in a highly competitive industry, our revenue, profits or market share could be harmed if we are unable to compete effectively.” -Prospectus, page 21

No doubt SeaWorld Entertainment Inc (NYSE:SEAS) operates in a market with many players, competing with other “pure” theme-park companies such as Cedar Fair, L.P. (NYSE:FUN) and Six Flags Entertainment Corp (NYSE:SIX), as well as subsidiaries of entertainment conglomerates such as The Walt Disney Company (NYSE:DIS) and Comcast Corporation (NASDAQ:CMCSA).

Likewise, your biggest concern should lie in Seaworld’s miniscule cash balance of $45 million (table below). The $64 billion question: how can Seaworld effectively compete against entertainment conglomerates such as Disney, which possesses 133 times the amount of cash on its balance sheet, or Comcast Corporation (NASDAQ:CMCSA), which possesses 129 times the cash?

Building roller-coaster rides and building theme parks in general represents a capital-intensive exercise. With The Walt Disney Company (NYSE:DIS)’s deep pockets, it can develop new characters, acquire new iconic entertainment companies to add to its already strong portfolio and incorporate them into new theme park rides renewing consumer interest.

For example, Pixar plans to release the movie Planes, which will add to a vast universe that Disney can leverage into new roller-coaster rides, television shows and merchandise. The Walt Disney Company (NYSE:DIS) also plans to put Lucasfilm’s assets to work by producing a new Star Wars movie for release in 2015 on which it can base new theme-park rides, television shows, etc. Disney does not know the limits of exotic animals. Its diversity will contribute to superior shareholder returns for quite some time.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!