Six Flags Entertainment Corp. (SIX) Accused of Misleading Shareholders
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between April 25, 2018 and January 9, 2020, in June 2014, Six Flags Entertainment Corporation (SIX) announced the signing of its agreement to build multiple Six Flags-branded theme parks in China with Riverside Investment Group Co. Ltd. (“Riverside”), touting the partnership as an opportunity to “supercharge revenue growth.” The Company then began experiencing macroeconomic issues in China that delayed development; however, Six Flags assured it was “not material in the context of the long-term opportunity.” Contrary to these assurances, on February 14, 2019, Six Flags shocked investors with its negative revenue adjustment of $15 million, citing delays in expected opening dates. On October 23, 2019, the Company announced yet another postponement of China’s park openings. Finally, on January 10, 2020, Six Flags revealed it continued to encounter macroeconomic challenges, resulting in no realized revenue for fourth quarter 2019, an expected negative $1 million revenue adjustment, and charges totaling $10 million related to Riverside’s default. On this news, the stock fell to $35.96 per share, representing a 46% decline from its class period high of $66.69 per share.
