SIX - Why Six Flags Entertainment Stock Opened 11% Higher on Thursday
Shares of regional amusement park operator Six Flags Entertainment (NYSE: SIX) jumped as much as 11% in the first half-hour of trading today. The gains were likely precipitated by a company news release on Wednesday, which was revised and updated today before the market opened. Investors clearly viewed the update as a positive event, but there's a negative here that can't be overlooked.
The big news is that Six Flags' lenders have granted it additional leeway, showing that they are still willing to work with the company through what is a very difficult time. Economic shutdowns and social distancing related to COVID-19 have had a particularly heavy impact on the amusement park company. As such, lenders have extended a key leverage covenant waiver by a year to the fourth quarter of 2021, with an additional covenant modification extended out to 2022. The important takeaway is that these moves allow Six Flags more time to recover from the impact of COVID-19.
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