Six Flags Entertainment Corporation Class Action Lawsuit
- Company Name
- Six Flags Entertainment Corporation
- Stock Symbol
- Class Period
- April 25, 2018 to January 9, 2020
- Northern District of Texas
On February 12, 2020, the Six Flags Entertainment Corporation securities class action lawsuit was commenced charging Six Flags and certain of its officers with violations of the Securities Exchange Act of 1934. The Six Flags securities class action lawsuit was commenced in the Northern District of Texas on behalf of purchasers of Six Flags securities between April 25, 2018 and January 9, 2020 (the “Class Period”) and is captioned Electrical Workers Pension Fund, Local 103, I.B.E.W. v. Six Flags Entertainment Corporation, et al., No. 20-cv-00346.
Six Flags is the world’s largest regional theme park operator, with 26 parks across North America. On June 23, 2014, Six Flags announced that it had signed an agreement with Riverside Investment Group Co. Ltd. (“Riverside”), a Chinese real estate developer, to build multiple Six Flags-branded theme parks in China.
The Six Flags securities class action lawsuit alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse facts regarding Six Flags’s business, operations, and growth prospects related to its agreements with Riverside to develop theme parks in China. As development of those parks began to face delays, defendants misled investors by downplaying the problems as “short-term” and “not material in the context of the long-term opportunity.” Defendants also assured investors that Riverside was “work[ing] through” the macroeconomic issues in China and that Riverside was in “great shape” financially. In truth, Riverside was in severe financial distress and did not have the resources to timely complete its projects with Six Flags. As a result of defendants’ misrepresentations and omissions, the price of Six Flags’ common stock was artificially inflated to more than $70 per share during the Class Period.
The truth emerged through a series of disclosures, beginning on February 14, 2019, when Six Flags announced a negative $15 million revenue adjustment for the fourth quarter of 2018 due to delays in the expected opening dates of some of its Chinese theme parks, which Six Flags falsely blamed on macroeconomic issues in China. On October 23, 2019, Six Flags again postponed the timing of its park openings in China, stating “it’s unrealistic to think it’s going to be exactly as we’ve outlined.” Finally, on January 10, 2020, Six Flags disclosed that the development of its Six Flags-branded theme parks in China continued to encounter challenges and had not progressed as expected, placing the future of the parks in jeopardy. Six Flags also revealed that Riverside continued to face significant financial challenges that had caused Riverside to default on its payment obligations to Six Flags. As a result of these disclosures, the price of Six Flags common stock declined nearly 18%, to close at $35.96 per share on January 10, 2020.
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