To The Moon

$Six Flags Entertainment Corporation(FUN)$

Six Flags Entertainment (NYSE: SIX) has taken a beating in 2025, with shares down approximately 40% year-to-date. Investors are spooked by rising interest rates, recession fears, and a fresh wave of volatility triggered by President Donald Trump’s new tariffs on major U.S. trading partners. But amid all the doom and gloom, I see a compelling opportunity in Six Flags. In fact, I believe this is one of the few consumer discretionary stocks that could hold up relatively well—and potentially outperform—during this turbulent stretch in the market.

In this article, I’ll break down the investment thesis in greater detail, including the macro tailwinds that may support the company’s earnings, and walk you through my proprietary discounted cash flow (DCF) valuation model. The bottom line? Six Flags is trading well below its intrinsic value, and for long-term investors, it could offer meaningful upside with an attractive margin of safety.

The Setup: Why Six Flags Has Been Hit So Hard

As mentioned, Six Flags stock has declined about 40–41% from its recent highs. That’s a steep drop, driven in part by broader concerns around consumer spending, rising costs of capital, and fears that a recession could be around the corner. Theme parks are often lumped in with other economically sensitive stocks, which explains the sharp selloff. But a closer look reveals that Six Flags isn’t just another discretionary name—it’s a unique play on shifting consumer behavior.

The Rebound from COVID—and the Enduring Demand for Experiences

Let’s start with the fundamentals. Like most entertainment companies, Six Flags took a massive hit during the COVID-19 pandemic. Revenue plunged as lockdowns shuttered theme parks and travel came to a halt. But in the years since, the company has staged a strong comeback. Its trailing 12-month revenue sits at approximately $2.7 billion, with $373 million in cash flow from operations—translating to an operating cash flow margin north of 10%.

Much of this recovery has been driven by a secular shift in consumer behavior: people are spending more on experiences over material goods. This post-COVID trend has shown surprising resilience. Rather than fading as pandemic-era stimulus wore off, demand for entertainment, travel, and in-person activities has remained elevated. For a brand like Six Flags, that’s a promising sign.

Tariffs Could Shift Spending from Goods to Services

Here’s where the macroeconomic picture gets interesting. President Trump’s recently announced tariffs are expected to raise the cost of a wide array of imported goods—from electronics to home appliances. These new tariffs could reignite inflation in certain categories, putting pressure on household budgets and delaying big-ticket purchases.

But Six Flags stands to benefit from this shift. The company isn’t a major importer; its cost structure is largely domestic and stable. That gives it a degree of insulation from tariff-related cost inflation. While companies that rely heavily on global supply chains scramble to adjust, Six Flags can maintain pricing discipline and predictability.

At the same time, if consumers shy away from expensive imported goods, they may reallocate those dollars toward services and experiences. A family might delay buying a new iPad or washing machine—but still take the kids to a local theme park for a weekend. From a behavioral economics standpoint, that’s a powerful tailwind.

Why Six Flags Is a More Efficient Business Than It Looks

Another point worth highlighting: Six Flags is a more efficient business than many realize. With an asset-heavy model and significant fixed costs, it doesn’t need to continuously reinvest massive capital to maintain growth. Once a park is built, ongoing maintenance and modest upgrades are enough to sustain high-margin operations.

Moreover, the company has room to raise prices incrementally—say, by 3–8%—without significantly hurting demand. These price increases, paired with better attendance, can drive earnings higher without needing big increases in capex. The result is expanding cash flow margins over time, even in a challenging macro environment.

The Macro Case: Tariffs Will Reshape Spending Patterns

With a new wave of tariffs hitting imports—from smartphones and electronics to furniture and appliances—consumer goods are getting more expensive fast.

That shift is likely to push discretionary spending toward services instead. Six Flags, with its domestic footprint and stable cost structure, becomes a more attractive option in this environment:

• Minimal exposure to imports: Tariffs don’t hit Six Flags’ cost structure.

• Experience > Stuff: Consumers cutting back on goods may still splurge on local entertainment.

• Sticky habits: Even during soft economic periods, families carve out money for affordable fun.

My Valuation: Six Flags Is Undervalued by More Than 50%

Using a detailed discounted cash flow (DCF) model, I estimate the intrinsic value of Six Flags to be approximately $5.7 billion, based on moderate long-term growth assumptions. Specifically, I project free cash flow growing from around $360 million in 2025 to roughly $550 million by 2033. This isn’t a hyper-growth story—it's a steady, cash-generating machine with long-term staying power.

I modeled a steady but conservative trajectory of free cash flow:

Importantly, I’ve incorporated the company’s $2.5 billion in debt into my model, adjusting for a higher cost of capital to reflect that financial leverage. Even after those conservative adjustments, I arrive at a fair value estimate of $63 per share. That’s more than double the current market price of around $29.

From a relative valuation perspective, the stock is also cheap. It trades at just 11.4x forward earnings, its lowest multiple in over three years. When you consider the company’s improved operating leverage and relative pricing stability under a tariff-driven economy, the disconnect between price and value becomes even more striking.

Key Risks to Consider

Of course, no investment is without risks. A sharp recession could lead to job losses and reduced discretionary spending. That might hit theme park attendance in the near term. Debt is another concern; with $2.5 billion in long-term obligations, Six Flags has less financial flexibility than debt-light competitors.

That said, I believe these risks are already priced into the stock. And if tariffs remain in place, the broader shift in consumer spending from goods to services could create a favorable operating environment for Six Flags over the next several years.

Final Thoughts: A Tariff-Resilient Play in a Shaky Market

If you’re looking for names that can weather the current market storm—and perhaps even benefit from it—Six Flags Entertainment is worth serious consideration. The company’s domestic cost structure, stable cash flows, and pricing power give it unique advantages in a market where many peers are struggling with inflation and import disruptions.

At current levels, the stock offers a rare combination of deep value and structural resilience. While the broader market flails in response to tariffs and policy uncertainty, Six Flags may quietly deliver solid returns to patient investors who can look past the short-term noise.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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