Movie theater’s earnings are predicted to be down 70 percent for 2020 earnings, a decline that’s been affecting the stock prices. In a note to shareholders, Eric Handler of MKM Partners predicted further falling stocks for theater chains including AMC, Cinemark, Imax Corp., and National CineMedia. He maintained a “buy” rating on Cinemark and Imax, with the others “neutral.”
FIlmmakers have continued to delay the release of their summer movies this year, worried there won’t be enough movie-goers to make the theatrical premiere worth their while. Christopher Nolan’s highly anticipated and marketed Tenet is rumored to be pushing back its release date yet again. The movie has a “low likelihood” of being released on August 12 as scheduled, according to Handler.
It was only last month that The National Association of Theater Owners (NATO) predicted 90 percent of theaters would be reopened in July, but now the reality for that still happening is obsolete.
“The near-term outlook for exhibition related stocks remains extremely clouded,” Handler wrote. “It would be surprising to see theaters able to re-open nationwide before September, at the earliest.”
WarnerBros Entertainment needs at least 80% of theaters to be up and running around the country in order to release Tenet and make it profitable. The film cost $200 million to make and with director Christopher Nolan skimming 20% right off the top, the movie will need to play on at least 3,500 in the U.S. and 30,000 more around the world to make it worth its time at the box office.
This summer has been a seemingly never-ending circle of theaters announcing reopening plans, only to have them change or reduced, pushing filmmakers to delay movie releases.
But if its any consolation, the future is looking slightly brighter for 2021.
“Beyond this year, we do believe there is pent up demand for consumers to get out of their houses for entertainment although the ramp up in attendance will likely be gradual,” Handler wrote. The analyst is projecting domestic box office of $9.1 billion in 2021, which is still lower than what it should be in a normal world, but a “back to normal” 2022, with $11.5 billion.
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