Why the Village Roadshow Ltd [ASX:VRL] Share Price Slumped Today…

Why the Village Roadshow Ltd [ASX:VRL] Share Price Slumped Today…

What happened to Village Roadshow shares?

Shares of listed entertainment company Village Roadshow Ltd [ASX:VRL] slumped more than 6% today, as the company’s second-half performance is expected to be below the first-half performance.

Why did the VRL share price drop?

The fatal accident at the company’s Dreamworld theme park in October last year resulted in the temporary closure of the park, which naturally affected revenues and profits for the business.

Also, the results at the company’s Sydney Wet’n’Wild park are expected to be lower than previously thought.

Bloomberg reports:

Total attendance for Gold Coast parks down 9.4% in 9 mos. to March 31; membership renewals also declined in March.

Businesses like theme parks can be very sensitive to the economy to begin with. But with heavy competition among theme parks on the Gold Coast, consumers can choose an alternative.

While the accident last October was a one-in-a-million event, there is no doubt that consumers, and especially parents, will think twice about visiting Dreamworld, especially when there are several other parks to choose from.

What now Village Roadshow Ltd?

The Village Roadshow share price has performed terribly since 2014, when it hit a high of $8.29. Today, it’s trading for $3.75. Many investors may see the current share price weakness as an opportunity to buy at a lower price.

While it may look tempting, we would suggest looking elsewhere. The company’s revenue and profit growth has been poor in recent years, and there certainly appear to be better opportunities elsewhere on the Aussie market.

Village Roadshow may look tempting, but it’s likely a temptation most investors should resist.

By Kris Sayce

Kris Sayce

Kris Sayce, dubbed the ‘Jeremy Clarkson of Australian finance’, began as a London finance broker specialising in small-cap stock analysis on London’s Alternative Investment Market (AIM). Kris then spent several years at one of Australia's leading wealth management firms.

A fully accredited advisor in shares, options, warrants and foreign-exchange investments, Kris was instrumental in helping to establish the Australian version of the Markets and Money e-newsletter in 2005.

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