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This Ban Could Jeopardize SeaWorld's Blue World Project

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  • SeaWorld Entertainment Inc (NYSE: SEAS) shares are down 9 percent since April 10, and lost 5 percent on October 9.
  • Wedbush’s James Hardiman maintained a Neutral rating on the company, with a price target of $21.
  • The possible ban on orca what breeding could jeopardize the company’s Blue World Project and exert pressure on shares, Hardiman said.

The California Coastal Commission has introduced a bill to ban captive orca whale breeding, while also restricting the movement of whales in and out of SeaWorld San Diego. SeaWorld had plans to build an expanded whale facility, named the Blue World Project, with an investment of $100 million.

Analyst James Hardiman said that the ban would apply to the 11 whales currently at SeaWorld San Diego, and would mean that the theme park would not have any more whales in future.

The Blue World Project aimed to improve the lives of its orca whales, which SeaWorld hoped would help address the negative PR it has received over the past couple of years, following the Blackfish documentary, Hardiman mentioned.

The analyst explained that the Coastal Commission does not have the authority to ban orca breeding, but only to put this as a condition to the company’s request to build Blue World. SeaWorld is unlikely to spend $100 million to “enhance the lives of the last 11 whales that the park will ever see.”

Wedbush noted, “Making matters worse, were SeaWorld San Diego to spurn the Coastal Commission and pull the plug on the Blue World Project, this would likely make approval of any future projects incrementally more difficult.”

While SeaWorld’s shares are down about 5 percent, there is further downside “as the story gains more traction,” Hardiman wrote.

Latest Ratings for SEAS

DateFirmActionFromTo
Mar 2021KeyBancMaintainsOverweight
Feb 2021Credit SuisseMaintainsOutperform
Nov 2020KeyBancMaintainsOverweight

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