Cinema stocks are on the rise. Here’s why.
Movie theater stocks are back in the limelight after reporting higher than expected earnings on opening weekend for the James Bond and Venom sequels.
“Venom: Let There Be Carnage” grossed $ 90.1 million in domestic box office revenue, the second-highest October opening weekend yet. The latest chapter in the 007 saga, “No Time to Die,” opened for $ 119.1 million in 54 foreign markets, becoming the first Hollywood film to surpass $ 100 million without Chinese moviegoers during the pandemic.
The surprisingly strong performances last weekend pushed movie theater shares higher on Monday. In the middle of the morning, the exchanges,
(ticker: CNK) the stock rose 5.5%,
Stocks (IMAX) rose 3.3%, Marcus Corp. (MCS) 3.5% and National CineMedia (NCMI) 4.2%.
AMC Entertainment, however, fell 3.8%, likely because retail investors, not institutional investors, tend to be the main drivers of meme action, said Benchmark analyst Mike Hickey. that of Barron. Although surprised that the stock did not improve after the weekend news, he pointed out that the behavior of retail investors is more difficult to predict.
In a Monday note, Hickey raised his third-quarter financial estimates for Cinemark and reiterated a buy note for the stock, highlighting the company’s expected ongoing recovery and a strong roster of upcoming films.
B. Riley’s analyst Eric Wold also expects a strong performance in theaters. In a Monday research note, Wold estimated that domestic film attendance in 2022 would be about 15% below 2019 levels, indicating an imminent return to pre-pandemic levels. The analyst reiterated a buy note for Cinemark, IMAX, Marcus Corp. and National Media.
“If record or near record box office performance during a pandemic is not validation for the exhibition industry and another positive sign of an ongoing recovery, then we don’t know what investors are hoping to see,” he said. he wrote.
Investors could also react to the decision of major producers to stop simultaneously releasing films in theaters and on streaming services, an approach that turns out to generate reduced revenues. This weekend alone, Warner Bros. has released a hybrid release for “The Many Saints of Newark”, the highly anticipated prequel to the HBO feature film “The Sopranos”. The film generated $ 5 million in ticket sales nationally, below its expected opening range of $ 7 to 12 million, CNBC reported.
Earlier this year, “Black Widow” actor Scarlett Johansson sued
for breach of contract when the film was released on the company’s streaming service at the same time as in theaters. The lawsuit argued that Johansson’s contract depended on box office revenue, which plummeted due to the hybrid release.
and Johansson settled the dispute last week.
Write to Sabrina Escobar at [email protected]