- Feb 3, 2019
- 3,128
- 5,611
- 250
Summary: the board doesn't care about morale and quality of product when they're making this much money by not caring about it.
But even with these mixed numbers the stock closed yesterday at $68.78 which is just off of the 52 week high. However it's predicted it will drop today because of the these results.
Source?
SeaWorld stock set to fall after profit and revenue missed expectations, while attendance beat
Shares of SeaWorld Entertainment Inc. undefined were indicated down about 2% in premarket trading Tuesday, after the theme park operator reported...www.marketwatch.com
Bottom line : money good, experience bad = SEAS doesn't see a reason to change courseSo, attendance down, gross income up, net profits up; employee pay down, employee numbers down, fights up.
Every single quarter they keep insisting that automation is playing a role in their higher margins, but I still can't find that reflected ANYWHERE in the parks. Does anyone have any idea what they could be referencing?
Maybe it's just me, but I find stock buybacks a complete waste of money. I'm sure they could have used some of that $133.0 million to build the original event building and add some theming to Pantheon. Buybacks were largely illegal until 1982.
It's not really a dividend since the value is tied to the stock, but it does artificially raise the stock price (usually temporarily). The problem with stock buybacks in general is that money could be used for researching new products, creating better customer experiences, investing in the workforce and so on. The rise in the stock price isn't because of new products or increased market share of the company but is instead using large sums of cash to buy back stock. In 2021 there was a combined $850 billion in buybacks. Most companies also then release shares that then dilute the price making the whole process a wash. The idea is management buys back stock, exercise their options, and then release a bunch of stock bringing the price back down. This is explained in the article below.I wouldn't say that. Buybacks aren't much different than a dividend. Think of it like a no interest loan. Need money? Add more shares. Making a lot of money? Buy them back (pay off the loan).
When the company buys back, the share price rises, much like a dividend.
Maybe it's just me, but I find stock buybacks a complete waste of money. I'm sure they could have used some of that $133.0 million to build the original event building and add some theming to Pantheon. Buybacks were largely illegal until 1982.
I would argue that a stock buyback is basically taking that money and setting it on fire. This does very little for the company and most likely not much for the long term stock holder. In the end this will have very little effect in the stock price. If you don't want to spend that money by investing in the parks, how about paying down some of that 2B in debt the company is carrying. What's crazy is when they passed the Tax Cuts and Jobs Act of 2017, companies in the S&P 500 Index did a combined $806 Billion in buybacks. Basically, most of the tax cuts didn't go into creating jobs or better products, it mostly went into management's pockets (Since the number of shares for most of theses companies were not diluted). Here is another article that points out the dangers of these stock buybacks.
Why Stock Buybacks Are Dangerous for the Economy
Even as the United States continues to experience its longest economic expansion since World War II, concern is growing that soaring corporate debt will make the economy susceptible to a contraction that could get out of control. The root cause of this concern is the trillions of dollars that...hbr.org
I agree that they should put a serious tax on these buybacks or better yet, make them illegal again.
SourceInvestopedia said:Financial leverage [basically a term for debt financing] has value due to the interest tax shield that is afforded by the U.S. corporate income tax law.1 The use of financial leverage also has value when the assets that are purchased with the debt capital earn more than the cost of the debt that was used to finance them. Under both of these circumstances, the use of financial leverage increases the company’s profits.
I understand what you're saying about debt and that it isn't just money owed but also bonds and securities and I'm not saying that debt is necessarily bad. If most of the debt was acquired in the last few years they probably have a decent rate and even less reason to pay it off sooner. The problem is that stock buybacks are definitely being abused creating massive amounts of corporate debt to buy back stocks for temporary gains. I can think of many examples such as Sears, Hertz, GM and Fiat where spending cash assets on stock left them in a bad position when they experienced a decrease in revenue and had to file for Chapter 11. The worst were the airlines that spent a combined 45 billion on stock buybacks before the pandemic and asked the government for 50 Billion in bailouts. We also have a large number of zombie companies that will never be able to pay back all their debt but were kept afloat with the Feds policy of buying corporate bonds during the pandemic. Most of the huge gains in the stock market are also from stock buybacks and not from a general increase in value of many of these companies. In all fairness SEAS did well enough during the pandemic and purchasing $133.0 million on stock buybacks isn't necessarily going to hurt them, unless something happens that seriously impacts their business in a negative way. The real question is what exactly did SEAS gain from buying back stock that the money couldn't have been invested elsewhere for better returns in the long run, paying down some of the higher interest debt or just kept for a rainy day. Here's an article on the airlines that also explains the motivation for these buybacks -You are misunderstanding the function of debt in a corporate financial structure. Debt doesn't just mean that SEAS owes money to contractors or manufacturers or anything like that. It also refers to bonds and securities issued by SEAS, which are used as an alternative to equity financing (i.e. stock issuance). Bonds and securities work by gradually paying off the bondholders in the form of regular, scheduled payment intervals over a set period of time (often 10 years). So, not only is carrying debt a super common form of financing a company, but SEAS literally isn't supposed to pay off much of that debt yet; it will be paid off in the proper installments over time.
Furthermore, not only is debt financing common, but it can actually be advantageous because it creates a "tax shield," essentially a reduction on taxes by making non-taxable debt part of its capital structure. A company like SEAS has determined that in their case, they will be more profitable by continuing to hold debt as part of their capital structure.
Source
I don't mean to single you out, but I've noticed a handful of posts across the forum seemingly criticizing SEAS for the amount of debt they have. As long as SEAS is following the rules, there is absolutely nothing wrong with them having debt, and there is no reason that they must prioritize paying it off. In fact, in SEAS' case, it may be the case that going overboard in paying back their debt would actually harm the company's profitability.
I understand what you're saying about debt and that it isn't just money owed but also bonds and securities and I'm not saying that debt is necessarily bad. If most of the debt was acquired in the last few years they probably have a decent rate and even less reason to pay it off sooner. The problem is that stock buybacks are definitely being abused creating massive amounts of corporate debt to buy back stocks for temporary gains. I can think of many examples such as Sears, Hertz, GM and Fiat where spending cash assets on stock left them in a bad position when they experienced a decrease in revenue and had to file for Chapter 11. The worst were the airlines that spent a combined 45 billion on stock buybacks before the pandemic and asked the government for 50 Billion in bailouts. We also have a large number of zombie companies that will never be able to pay back all their debt but were kept afloat with the Feds policy of buying corporate bonds during the pandemic. Most of the huge gains in the stock market are also from stock buybacks and not from a general increase in value of many of these companies. In all fairness SEAS did well enough during the pandemic and purchasing $133.0 million on stock buybacks isn't necessarily going to hurt them, unless something happens that seriously impacts their business in a negative way. The real question is what exactly did SEAS gain from buying back stock that the money couldn't have been invested elsewhere for better returns in the long run, paying down some of the higher interest debt or just kept for a rainy day. Here's an article on the airlines that also explains the motivation for these buybacks -
We use essential cookies to make this site work, and optional cookies to enhance your experience.