Movie theater stocks are back in the spotlight after reporting stronger-than-anticipated opening weekend revenues for James Bond and Venom sequels.
“Venom: Let There Be Carnage” generated $90.1 million in domestic box office revenues, the second-highest October opening weekend to date. The latest chapter of the 007 saga, “No Time to Die,” opened to $119.1 million from 54 overseas markets, becoming the first Hollywood film to exceed $100 million without Chinese moviegoers during the pandemic.
The unexpectedly strong performances last weekend pushed movie-theater stocks higher Monday. In midmorning trading, Cinemark (ticker: CNK) stock was up 5.5%, IMAX (IMAX) stock was up 3.3%, Marcus Corp. (MCS) was up 3.5%, and National CineMedia (NCMI) was up 4.2%.
“If record-breaking, or near record-breaking box office performances during a pandemic is not validation for the exhibition industry and another positive sign of ongoing recovery, then we do not know what investors are hoping to see,” wrote B. Riley analyst Eric Wold in a Monday research note.
Wold estimated that domestic film attendance in 2022 would be about 15% lower than 2019 levels, indicating an imminent return to prepandemic levels. The analyst reiterated a Buy rating for Cinemark, IMAX, Marcus Corp., and National Media.
Benchmark analyst Mike Hickey also expects some movie-theater stocks to rally. In a Monday note, he raised his third-quarter financial estimates for Cinemark and reiterated a Buy rating for the stock, pointing to the company’s expected ongoing recovery and strong coming film slate.
Investors also could be responding to the decision by major producers to stop releasing movies in theaters and on streaming services simultaneously, an approach that is proving to generate reduced revenues. Just this weekend, Warner Bros. had a hybrid release for “The Many Saints of Newark,” the much-expected feature film prequel to HBO series “The Sopranos.” The film generated j $5 million in ticket sales domestically, falling short of its $7 million to $12 million projected opening range, CNBC reported.
Earlier this year, “Black Widow” actor Scarlett Johansson sued Disney for breach of contract over the film’s release on the company’s streaming service at the same time as in theaters. The lawsuit argued Johansson’s contract was contingent on box office revenues, which dipped because of the hybrid release. Disney and Johansson settled the suit last week.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
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October 04, 2021 at 09:34PM
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Movie Theater Stocks Are Up. Here's Why. - Barron's
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