Ardent (ASX:ALG) share price crashed by half in 2020. Where to next?

Ardent Leisure Group Ltd (ASX: ALG) has had a year to forget. 

That’s because the Ardent share price lost half its value over the course of 2020, and has been among the ASX companies hardest hit by the coronavirus pandemic.

However, with the new year and new hopes of a vaccine, can the leisure and entertainment company turn itself around in 2021?

What moved the Ardent share price in 2020?

Ardent Leisure owns and operates leisure assets such as Dreamworld and WhiteWater World theme parks and SkyPoint on the Gold Coast, Queensland.

Its Main Event portfolio in the United States also includes 43 family entertainment assets.

These leisure venues have been at the mercy of government-ordered lockdowns throughout last year, as the pandemic took its deadly grip on the world.

As a result, the company reported a bottom line net loss after tax of $136.6 million, which came on top of a $60.9 million loss in FY19.

The theme parks division reported trading revenue of $54.5 million for the year, down 18.8%.

The company has been making losses since fiscal 2017, after fatalities at the Dreamworld venue in October 2016 led to a sharp drop in attendance.

It has looked for fresh capital to help fill the fast-depleting coffers, with RedBird Capital recently injecting $129 million of cash into the US business.

The theme parks division has also recently received a $66.9 million loan from the Queensland Government.

Can the company turn things around in 2021?

Ardent Leisure’s business is obviously highly leveraged to the COVID-19 recovery theme, but there’s some good news on this front.

The Ardent share price has risen 80% in the last 6 months as the government eases social and travel restrictions.

The share price was also buoyed by the Westpac-Melbourne Institute Consumer Sentiment Index hitting 112.0 in December 2020 – 48% above the April low and highest since October 2010.

The fate of its 43 Main Event venues in the US however, is less clear,  given that the US is still in a deep battle to contain the pandemic.

Ardent has said that it will still face revenue pressures even if lockdowns were lifted, as restrictions on attendance numbers is likely to constrain its cash flow.

Beyond the coronavirus crisis however, Ardent Leisure possesses solid leisure and entertainment assets with relatively high barrier of entry due to the capital intensive nature of the venues.

However, the company has acknowledged that it’s competing for leisure dollars especially against online digital entertainment, where many traditional entertainment activities can now be enjoyed in a virtual setting.

About the Ardent share price

As mentioned, the Ardent share price has lost around half its value in one year. It started 2020 at around $1.40 before plummeting to a low of 10 cents in March. 

At the time of writing, the Ardent share price is trading at 70 cents, down 1.4%. The company commands a market cap of $340 million.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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