If you thought that the weekend’s record-shattering sales for Star Wars: The Force Awakens would lead to a rally for Disney and exhibition stocks, you might be surprised by the group’s performance this morning. Shares are mixed but basically flat even after domestic ticket buyers spent as much as $250 million over the three-day period.
The benchmark Standard & Poor’s 500 is up 0.5%.
Before today, shares in the four leading exhibition chains were flat to down over the last three months as Wall Street responded to a string of films that fell short of analysts’ expectations.
The consensus view among analysts was that that Q4 would be up 11% vs the same period last year. But that looked like a stretch after releases including Spectre, The Hunger Games: Mockingjay – Part 2, Good Dinosaur, Steve Jobs, and The Night Before missed the Street’s targets.
Following this weekend, the quarter is up 3.3% and could reach as high as +6%, MKM Partners’ Eric Handler says.
B. Riley & Co’s Eric Wold is more optimistic. To meet expectations, next week’s sales will have to be 25% higher than the last week of 2014 and “that is definitely within reach.” In any event, he believes that this weekend “should boost investor confidence in both quarter-ending box office strength and provide an incremental boost to 2016 trends.”
Piper Jaffray & Co’s James Marsh is still waiting to offer a verdict. “The big question is whether demand was pulled forward and the hold will moderate or if repeat business can drive the box office from here,” he says. The payoff for theaters may be “a bit limited,” in comparison with other films, though: Disney’s take from box office sales “could reach in the neighborhood of 65-70% depending on the size of the exhibitor,” he says.
Still, theater owners have reason to smile.
Imax set personal-best records with $30.1 million of the domestic total, and an additional $17.9 abroad — even without China, where the film opens January 9. That beat the $44 million it saw for Jurassic World‘s opening weekend. All told, the company averaged $77,000 per screen, again, a record.
That’s also good news for AMC which has 10 of the nation’s 15 top-grossing theaters, and 45% of domestic Imax venues.
The No. 2 exhibition chain, after Regal, “has been overlooked by investors” ahead of the Star Wars release, Wold says. That “provides an attractive set-up for AMC to noticeably outperform both the industry and its exhibitor peers during Q4 in terms of box office per screen and attendance (which will be recognized also through high-margin concession revenue strength).”