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PETA Buying SeaWorld Shares to Force Killer Whale Release - Stocks in the News

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SeaWorld Entertainment, Inc ( SEAS ) shares have dropped over 33% due to very weak earnings for the second quarter and slashing revenue guidance for the year. Overall, SeaWorld reported a second-quarter profit of $37.3 million, or 43 cents a share, compared with a year-earlier loss of $15.9 million, or 18 cents a share. Revenue declined 1.5% to $405.2 million.

While things have been rough recently, mostly thanks to backlash from SEAS' treatment of Killer Whales, shares are trading up 1.07% today. This actually stems from news that animal rights group PETA is expanding its stake in the company.

Why PETA can't save SeaWorld

PETA, which stands for People for the Ethical Treatment of Animals, has bought more shares in an attempt to force changes at SeaWorld. A PETA representative said that they are on a mission to have a major stake in the company in order to take all Killer Whales out of captivity for good.

In an attempt to gain more voting rights in SeaWorld shares, PETA bought additional shares in the company, though the total market value of PETA's stake is still very small.

"By buying more stock in SeaWorld, we can continue to push executives toward the only humane solution for the orcas captive and that is relocating them to the coastal sanctuaries," said Lindsay Rajt , PETA activist.

Still, in order to sit at the table and start making major decisions like taking away a major attraction from SeaWorld, PETA would have to likely up its stake to around 5% of the total, or about 4.3 million shares worth about $82 million. According to PETA's 2013 financial report, their annual revenue was reported at $35 million indicating that not even their entire revenue could purchase a 5% equity interest in SeaWorld.

Bottom Line

PETA as always is trying to help care for animals that are not being taken care of correctly. But, attempting to buy shares in SeaWorld is probably not the way to do it because they just do not have enough capital to truly make a difference. PETA should just attempt to partner with SeaWorld and permanently fix the living habits of the killer whales, though it seems as if PETA is taking a hard-line stance on the issue, calling for their release. At the end of the day, the killer whale is a revenue generating asset for SeaWorld and it seems very unlikely that an organization, even as big as PETA,will be able to take that away from them.

We currently rank SeaWorld Inc. as a Zacks Rank #5 (strong sell) due to downgrades in estimate revisions in the next few quarters. In the past 60 days, 100% of analysts have downgraded their earnings estimates for SeaWorld, while the stock has had an average negative earnings surprise of 4.01% over the past four quarters.

The summer is coming to close and the seasonal business cycle will impact SeaWorld in a negative aspect, but will give the business some time to make major revisions in preparation for next year. Whether the killer whales will be there or not remains to be seen, but clearly if PETA gets their way there will be some big changes to SEAS and one of its most famous attractions before too long.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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