NEW YORK--(BUSINESS WIRE)--Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Six Flags Entertainment Corporation (“Six Flags” or the “Company”) (NYSE:SIX) of the April 13, 2020 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
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The lawsuit has been filed in the U.S. District Court for the Northern District of Texas on behalf of all those who purchased Six Flags common stock between April 25, 2018 and January 9, 2020 (the “Class Period”). The case, Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Six Flags Entertainment Corporation et al., No. 20-cv-00346 was filed on February 12, 2020, and has been assigned to Judge Ed Kinkeade.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) Riverside, a Chinese real estate developer that would provide the capital investment for future developments in China, faced far more financial distress than disclosed to investors; (2) as a result, there was a high likelihood that Riverside would default on its payment obligations to the Company; (3) the Company’s international strategy, which relied predominantly on its exclusive agreements with Riverside to develop Six Flags-branded parks in China to drive revenue growth, was significantly less promising than represented to investors; and (4) as a result of the foregoing, Defendants’ statements about the Company’s business, operations and prospects lacked a reasonable basis.
First, on February 14, 2019, the Company surprised investors by announcing a negative revenue adjustment of $15 million in the fourth quarter of 2018 related to the Company’s agreements with Riverside due to delays in the expected opening dates of some of the parks in China, which the Company blamed on macroeconomic issues in China. As a result, Six Flags reported a 38% decline in the Company’s sponsorship, international agreements and accommodations revenue compared to the fourth quarter of 2017. Six Flags also told investors that it expected weaker than anticipated quarterly revenue from its agreements with Riverside in 2019 and 2020.
On this news, the Company's stock price fell from $63.87 per share on February 13, 2019 to $54.87 per share on February 14, 2019: a $9.00 or 14.09% drop.
Then, on October 23, 2019, Six Flags again postponed the timing of its park openings in China, stating that “there’s a very high likelihood going forward that we will see changes in the timing of park openings” and “it’s unrealistic to think it’s going to be exactly as we’ve outlined.” As a result, the Company reported a 26% decline in sponsorship, international agreements and accommodations revenue for the third quarter of 2019 compared to the third quarter of 2018.
On this news, the Company's stock price fell from $51.23 per share on October 22, 2019 to $44.88 per share on October 23, 2019: a $6.35 or 12.40% drop.
Finally, on January 10, 2020, before the market opened, the Company revealed that the future of its China projects was in jeopardy. In particular, the Company announced that the development of the Six Flags-branded parks in China continued to encounter challenges and had not progressed as expected. The Company also reported that Riverside continued to face significant challenges due to the macroeconomic environment and declining real estate market in China, which caused Riverside to default on its payment obligations to Six Flags. Furthermore, the Company told investors that, in the fourth quarter of 2019, it would realize no revenue from its agreements with Riverside and expected a negative $1 million revenue adjustment related to those agreements. The Company also announced one-time charges totaling approximately $10 million related to Riverside’s default.
On this news, the Company's stock price fell from $43.76 per share on January 9, 2020 to $35.96 per share on January 10, 2020: a $7.80 or 17.82% drop.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Six Flag’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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