Participation in the premieres of the Barbie And Oppenheimersome on Wall Street doubted whether movies will be enough to fuel gains in movie theater stocks as a strike by Hollywood writers and actors casts a shadow over the industry’s prospects.
JPMorgan Chase & Co downgraded Cinemark Holdings Inc. this week, saying that dropping out actors is limiting the view of the film supply. Analyst David Karnofsky noted that the strike has already halted production of several films slated for release in the second half of next year.
“In the absence of a resolution, we expect the strike to remain a drag on Cinemark stock and limit the upside regardless of whether the box office outperforms in the near term,” Karnofsky wrote in a July 19 note to clients.
A stock market rally kicks off the year, spurred in part by April’s success Super Mario Bros movie First timeMedium cold dull Summer movie season. Premiere last weekend for the latest version in Mission: Impossible franchise to fail expectations, which added to the concerns of the sector. Cinemark and AMC Entertainment Holdings Inc. and Imax Corp. and Marcus Corp. on the S&P 500 since the beginning of May.
Cinemark, Marcus and Imax fell on Friday, while AMC rose.
Now, a writers’ and actors’ strike threatens to deglaze what is expected to be one of the busiest weekends for movie theaters since the start of the pandemic.
Barbie It earned $22.3 million in strong ticket sales from preview shows in theaters, while Oppenheimer It brought in $10.5 million in Thursday night previews. Adam Aron, CEO, AMC to publish on Twitter on Friday that was booked by more than 60,000 AMC Stubs members Barbie And Oppenheimer On the same day, and that would be three times as much as it was two weeks ago.
Bloomberg Intelligence analysts, who use Boxoffice Pro data in their analysis, lowered the forecast for revenue for the theater industry to about $8.9 billion this year, in part because of uncertainty caused by the simultaneous strikes. That’s about 2% lower than the early June peak.
Screen Actors Guild announce strike last week after failing to reach a new labor agreement with the Motion Picture and Television Producers Alliance. Meanwhile, the Writers Guild of America has been on strike since May. It’s the first time Hollywood writers and actors have hit at the same time in six decades.
Theater operators, as well as media companies including Warner Bros., backed off. Discovery Inc. , Paramount Global and The Walt Disney Co., on July 14, the first full trading session after the Hollywood actors relocated.
The syncopated hits are the latest blow to the theater industry, which is still trying to recover from the pandemic.
Both sides are “playing with fire” given the fragility of the industry, said Craig Huber, founder and managing director of Huber Research Partners LLC.
Shares of Cinemark and Marcus remained significantly lower than their pre-pandemic levels. IMAX has largely recovered as audiences have shown willingness to do so push up for a more immersive experience. Meanwhile, AMC has been choppy since it caught retailers’ interest in 2021.
Hooper warns that film and TV studios run the risk of driving away viewing that may never return as consumers flock to streaming services like Netflix Inc. that has “collected” enough content to count on at this point.
Netflix was the first company to address this issue when it reported quarterly earnings this week. The broadcasting giant raised its annual free cash flow forecast as a result of strikes that halted production and cut spending, though. Refused to counter How they will affect the company’s output from the new programming.
For Daiwa Capital Markets America Inc. and others on Wall Street, the duration of the strikes will ultimately determine the magnitude of their impact on media companies.
Since the double strikes cover emerging topics like compensation from flow and artificial intelligence, “we wouldn’t be surprised if these double strikes last longer than expected,” Daiwa analyst Jonathan Case wrote in a note.