SeaWorld Entertainment, Inc. (SEAS) shares rose more than 1% during Friday's session after better-than-expected first quarter financial results offset a 30% drop in traffic. Revenue fell 30.4% to $153.56 million but beat consensus estimates by $650,000. Meanwhile, the company's net loss of 72 cents per share was better than the loss of 75 cents per share estimated by analysts. The poor results were driven by a 30% drop in guests to 2.3 million during the first quarter.
Attendance initially rose by nearly 10% during the first two months of the quarter due to improved marketing, pricing strategies, and compelling attractions. While parks closed due to COVID-19, the company is working to extend expiration dates on its season passes and provide other offerings.
In April, Wedbush's James Hardiman estimated that SeaWorld had at least 16 months of liquidity, enabling it to weather the storm without experiencing dire financial consequences. While the company has requested government support, its move to furlough most of its staff and its private equity history make it an unpopular candidate for aid.
From a technical standpoint, SeaWorld stock is trading in a bullish ascending triangle pattern that could indicate upside ahead. The relative strength index (RSI) remains neutral with a reading of 56.29, while the moving average convergence divergence (MACD) has been trending higher toward the zero line. These indicators suggest that the stock has more room to run before consolidating at overbought levels.
Traders should watch for a breakout from the bullish ascending triangle pattern at around $16.00. If that occurs, traders could see a move toward the 200-day moving average at $26.32. If the stock fails to break out, traders could see a breakdown from support at around $13.00 and a move toward reaction lows of around $9.25 over the coming sessions.
The author holds no position in the stock(s) mentioned except through passively managed index funds.