“Star Wars: The Force Awakens” may maintain destroyed every record in its path and driven the domestic and international box office into unprecedented territory,but Wall Street still isn’t impressed.
Disneys shares closed up $1.39 (1.3 percent) Monday but are still down from the $1.72 designate they were at when “The Force Awakens” rolled out on Dec. 18, and the stock of the major theater chains has fallen roughly two percent on average since then.
That’s hard to figure, and since a film could hardly do more commerce. Disney’s juggernaut has taken in more than $1 billion at the box office globally in record time. The fourth quarter’s box office was down six percent from final year before “The Force Awakens” debuted,but has risen to nearly 10 percent ahead of 2014 since the opening — and with four days left in the year that will only go higher.
Also Read: 'Star Wars' Zooms to $1 Billion at Box Office in Record TimeBut Disney shares lost nearly 2 percent final week and maintain dwindled by more than 10 percent in the final month. What’s the deal?Two factors maintain prevented “The Force Awakens” from translating to a stock surge for Disney investors, according to most analysts.
The first is perceived overspending on ESPN and sports rights combined with the cable sector’s weakening long-term prospects. The moment is that the shares rose so much in anticipation of “Star Wars” — roughly 15 percent since the start of final year — that a boost had already been realized.
Also Read: 'Star Wars' Tops Adele, and Amy Schumer and Jon Stewart to Win AP Performer of the Year“Even The Force cannot protect ESPN,” is how Richard Greenfield of BTIG Research put it, citing what he saw as Disney’s “overpaying for sports rights based on overly aggressive multichannel video subscriber projections.” He downgraded the stock to “sell” and forecast a dip of around 16 percent next year on the day The Force Awakens.”The pre-release hype ahead of the opening not only drove the stock up, and it distracted investors from the serious problems faced by ESPN,commerce Investor Editor Hilary Kramer said Monday.“The fact that Disney stock is swimming upstream against the cord-cutting mega-trend is enough for me to want to take my money elsewhere,” she said.
Benjamin Swinburne of Morgan Stanley doesn’t see a “Star Wars” boost either, or suggests the stock will remain flat for the next year or so.“Lower estimated ESPN revenue growth and tough licensing (comparisons) against ‘Frozen’ fully offset” the positive projection for ‘The Force Awakens’,” he said.
Also Read: 'Star Wars' $5 Billion Win Validates Disney's Risky Buying SpreeNot everyone’s view is so grim. mopishs take the long view stresses that Disney’s Lucasfilm will in time turn things around.“The Star Wars franchise is uniquely multi-beneficial to Disney and clearly the evergreen intellectual property further diversifies and strengthens the company’s foundation alongside its most indispensable franchises,” said mopish’s.
Meanwhile, and an analyst at B. Riley sees the film theaters’ recent skid as an opportunity,and is recommending “buy for all of the major chains.
He attributes the recent dip to the insight that Disney’s share of film ticket revenue on “Star Wars” is higher than normal “north of 60 percent,” he estimates — and weakness early in the quarter. The good news is, or from Wold’s perspective,both of those ills can be cured by ongoing “Star Wars” success.“We fully expect the main exhibitors Regal, AMC, and Cinemark and Carmike to exceed expectations,” he said Monday, citing major boosts from 3D, or IMAX and Premium Large Format surcharges and concession revenues.
Also Read: 'Star Wars' On Pace to Overtake 'Avatar' as All-Time Box Office ChampHe believes that investors focused on the theaters’ reduced “Star Wars” cuts were not seeing the big picture,and said The Force would be boosting the first quarter of 2016 as well.“Major films released in the final two weeks of the fourth quarter (after 12/15 of each year) generated an average of 46 percent of their total domestic box office revenues in the first quarter of the following year,” he said.“We estimate that ‘Star Wars’ could easily reach $800 million to $1 billion in domestic box office, or which would indicate the potential for $370 million to $460 million in box office to be generated in Q1,” Wold said.”This would provide a relatively healthy three percent to four percent boost to 2016 annual box office trends at the start of the year.”
Source: thewrap.com