SeaWorld hasn’t had a lot of wins lately, but the worst could be over.
After 2 years of a seemingly non-stop stream of bad press and negative sentiment, analysts at Credit Suisse argue that the company’s brand may have hit rock bottom and that a comeback may be in order.
Their analysis includes a dive into all of the mentions of SeaWorld on the internet.
“We believe two events were the main contributors to the 400% spike in mentions and 13% increase in negative commentary month-over-month,” said Credit Suisse’s note. “Namely, 1) allegations that a SeaWorld employee acted as an undercover member of activist group PETA and 2) One Direction lead singer, Harry Styles, urged all of his fans to boycott SeaWorld during a concert in San Diego.”
The ratio of positive to negative online comments was at -68% in July, down 28 percentage points since the prior month. In fact, according to Credit Suisse, the Styles boycott call has led to the most negative comments for the company over the past 3 years.
“We recognised that fully resolving our brand challenges in California will require sustained focus and commitment,” SeaWorld CEO Joel Manby said in the company’s latest quarterly earnings call. “Let me assure you that we remain steadfast in our efforts to overcome these challenges and to improve the performance of the company.”
Accompanying all of this negative sentiment has been a turn for the worse in the company’s financials. After making a recovery from lows during the Great Recession, when many families chose to forgo vacations and theme parks, SeaWorld has seen a drop in profits and attendance.
The downturn started with a documentary
The bad news surged in 2013, when CNN aired the documentary “Blackfish” detailing supposed abuses and poor conditions at the parks for their marquee attractions, trained orcas.
In 2012, the company posted a profit of $US74.2 million for the year. A year later that number that dropped to $US51.9 million and in 2014 it slid further to $US49.9 million.
This has continued, with revenue dropping 3% in the second quarter of 2015 from the same time period the year before.
Attendance also has suffered, falling from 24.39 million in 2012 to 22.40 million in 2014, a drop of just over 8%.
Along with profits, the stock price of the company has plummeted from its highs of $US38.88 to $US17.74 as of the opening Thursday, nearly a 55% plunge.
According to the analysts at Credit Suisse, this may all be coming back around. It should be noted that the same analysts made this call in June, before the new spike of negative sentiment.
Setting up for a comeback
In March, the new management of the company launched a brand rehabilitation campaign and is expected to roll out a new strategic vision in November.
“Perhaps we need to get a little more current on the latest boy bands; however, while this could negatively impact SEAS’ core demographic in San Diego, we don’t believe it’s too late for SEAS to rectify its brand impairment issues, particularly as their reputation campaign (launched in March) gains traction,” the analysts said.
As part of this plan SeaWorld has launched a new ad campaign and devoted $US10 million to research and conservation for orcas. The note also mentions that this aggressive brand rehabilitation is vastly different than the relatively mum response the company had to the “Blackfish” documentary.
In making the case for a brighter future, the Credit Suisse analysts pointed to a few different brands that have suffered from terrible PR that have made bouncebacks including Carnival after the Concordia ship crash and Tylenol after they sent out cyanide laced medicine in 1982.
Additionally, tourism in Orlando, one of SeaWorld’s key markets, has continued to increase and the company’s ticket prices are significantly cheaper than Disney and Universal parks in the area.
The combination factors has the analysts optimistic with a $US27 price target for the stock. It’s currently trading just below $US18.
“While we don’t expect brand related issues to dissolve overnight and realise steering sentiment in the opposite direction will be a multi-step operation, it is our opinion that should SEAS illustrate a plan to re-position their brand, investors will be able to gain more comfort on the viability of the business long-term.”
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