Six Flags’ turnaround could take a while

CNBC’s Jim Cramer on Monday reviewed Six Flags‘ prospects, saying the amusement park giant might be able to improve business eventually if it works with its activist investor.

“While Six Flags’ new management should be able to turn things around with some help from Jana Partners and Travis Kelce, I wouldn’t stick your neck out in this one unless you’re willing to be incredibly patient, because it’s going to take a while,” he said. “And there’s always the chance that the company itself can’t make it if the weather’s bad or the parks keep having operational issues.”

Last month, activist investor Jana announced it had partnered with Kansas City Chiefs football player Travis Kelce and a few others to take a roughly 9% stake in Six Flags.

Six Flags has been facing macroeconomic headwinds as well as company-specific issues, Cramer suggested, which has led to disappointing earnings.

Business has been hurt by a broad decline in consumer spending, especially among the lower income cohort, he said. Poor weather conditions — like severe thunderstorms and heat waves — early in the season also hampered attendance as the company was forced to shut down parks for several days, Cramer continued.

One of the company’s new rides, which was meant to be a major draw, broke down several times over the summer, with one incident leaving passengers suspended in the air, Cramer noted. He also pointed out that Six Flags delayed opening new rides at a few locations, including in New Jersey and Massachusetts parks. Six Flags’ merger with peer Cedar Point hasn’t exactly helped the overall business, Cramer indicated, arguing that there hasn’t been a meaningful improvement in attendance more than a year after the deal. Low attendance leads to weaker sales of food, beverages, and other add-ons, he said.

Cramer stressed that the turnaround won’t be easy. He said the company needs to clean up its balance sheet, maybe close underperforming parks and cooperate with Jana. However, he said it’s a good sign that Jana came out in support of Six Flags’ recent CEO change.

“Jana’s got a great track record, maybe Kelce can rope in Taylor Swift’s legion of fans, on top of Chiefs fans,” he said. “Given that…they like the new CEO, I’m feeling a little more optimistic about Six Flags, especially with gasoline prices coming down hard.”

Six Flags declined to comment.