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Shares of publicly traded move chains fell sharply Monday while broader markets rose as Disney’s Black Widow helped drive the post (ish) pandemic box office to new highs but plenty of viewers siphoned off to Disney+, raising an alarm or at least a lot of questions.
AMC Entertainment, the biggest U.S. chain, saw its shares fall nearly 8% during the session. Cinemark, Marcus, Imax and National CineMedia dropped, respectively, 6.6%%, 3.5%, 3%, and 4.4%.
AMC, a meme stock that’s now owned by millions of individual investors, is extremely volatile but has been on clear downward trajectory lately, shedding $20 bucks since early June. CEO Adam Aron has embraced his new stockholders, who have a powerful megaphone on social media chat rooms. Their support buoyed the shares beyond any reasonable valuation from a 52-week low of $1.91 last year to a high of over $72.
AMC benefitted by selling stock at inflated prices to raise cash to keep the business running. Aron wants to sell more stock to raise more cash but recently agreed to scrap those plans as shareholders protested. More shares outstanding dilutes their position. Aron postponed the company’s annual stockholder meeting to July 29 to try to get them on board. Wall Street doesn’t generally love stock sales either, but in this case many think it would be a wise move for AMC in the current circumstances.
Overall revenue for the North American box office totaled $117 million for the weekend, the highest since President’s Day weekend in mid-February of 2020. Black Widow opened domestically at $80 million. But the gross dropped on Saturday from Thursday/Friday way more than usual for a Marvel title and the question is how much Disney+ Premier Access was behind that erosion.
Disney reported $60 million of revenue from its streaming platform — the first time its revealed these stats. “Disney is clearly pleased with this outcome, especially since it does not have to share any meaningful part of this income with partners,” said analyst Eric Handler of MKM Partners.
Specifically, as per Deadline, Black Widow‘s Saturday saw a huge 41% drop from its near $40M opening Friday (which included Thursday previews).
Disney stock closed up 4.15% Monday. The hybrid release was clearly a benefit but what remains to be seen the the impact on future downstream windows. Handler notes that some 2 million households — about 60-80 million people, he speculated — have already seen the movie at home.
Disney plans to release Jungle Cruise (July 28) on PVOD too and many fear it may continue the model for other tentpoles.
Disney shares are falling back into favor after a so-so second quarter as its businesses including theme parks start firing up. Investors are generally looking forward to insights from the next crop of media and entertainment earnings that kick off next Tuesday with Netflix. Any more clarity on streaming and theatrical strategy will be key.
MKM’s Handler sees the past weekend’s performance as “60%-65% of the way back towards a ‘normal’ type weekend. There are still markets with seating restrictions in place and Ontario (which includes Toronto) isn’t reopening until next weekend. The fact that Black Widow skewed less female and less family than expected, indicated Covid is still a concern as young children haven’t yet been vaccinated. The Delta variant is spreading fast and most theaters don’t have masking or social distancing restrictions anymore except as an honor system for unvaccinated patrons.
“Imagine being a theater owner and realizing studios need you less and less every day,” tweeted Rich Greenfield of LightShed Partners, a longtime media analyst and streaming bull. “Leverage is shifting rapidly in the streaming era toward the studios.”