4:46 PDT 4/5/2021
per
Georg Szalai
“Consumers want to leave the house and go back to the theater,” says Eric Wold of B. Riley, wondering if the mainstay’s theatrical success could be “possibly an indication that Warner Bros. made the wrong decision” with its strategy hybrid launch for 2021 slate.
The theatrical performance of Godzilla vs. Kong “destroys lingering concerns about the importance of the theater window and demonstrates a solid path to resurgence” for cinema operators, B. Riley Securities analyst Eric Wold said in a report on Monday.
He also raised the rating of AMC Theaters shares from “neutral” to “buy” and raised their target price from $ 7 to $ 13.
Publicizing the “impressive” domestic box office performance on the opening weekend for the Warner Bros. release. Godzilla vs. Kong despite the coronavirus pandemic, the analyst noted that the film starts at $ 48.5 million, compared favorably with Godzilla: King of the Monsters, which debuted with $ 47.8 million in May 2019 “with all cinemas open and without any capacity restrictions”.
In comparison, Wold pointed out that the North American theater base is “only about 60 percent open at the moment (including about 93 percent in the US and approximately 24 percent in Canada), with theater capacity restrictions in place. averaging 25-50 percent across the board, “concluding:” We feel these results are impressive. “
The Wall Street expert added: “We believe that consumers want to leave the house and return to the cinema, and these results are very revealing, especially considering that the film was available for free to HBO Max subscribers at the same time as the cinema release. . “
Wold took this as a sign that domestic moviegoers are leading consumers in international markets. “Since the reopening of a handful of overseas exhibition markets last year (for example, China, Japan, Australia), we have been increasingly optimistic that the strengthening of film trends in that market bodes well for the rest the world as additional markets reopen and new Hollywood content hits the screens. “He added that the fact that Godzilla vs. Kong “Exceeding” expectations and the predecessor film, despite “severe capacity constraints”, was “a clear indication that consumers want to return to theaters, despite the onslaught of streaming options arriving at homes”.
Wold also suggested that a series of “exclusive theater show deals that were signed between exhibitors and studios over the past year”, including AMC and Cinemark’s agreements with Universal and the Regal pact with Warner Bros., along with “nominations from Paramount that a 45 The exclusive window of a day is preferred “are a” positive indicator that a window exclusive to the cinema is preferred and necessary for the success of a film. “
The analyst even argued that the support’s performance could be “possibly an indication that Warner Bros. made the wrong decision” with its hybrid approach to its 2021 slate, which combines cinema and digital releases via HBO Max. “We have been adamant. that Warner Bros. would change its course and pivot to include an exclusive showcase for its upcoming movie releases, “said Wold.
Addressing AMC, he wrote: “We remain impressed by the management’s ability to weather the headwinds of the pandemic, both by strengthening the balance sheet and by negotiating with owners to improve the cash flow by 2022. And as the biggest North American exhibitor, which also operates the highest number of Imax premium screens, we see AMC well positioned to benefit from the projected resurgence in the industry and the return to pre-pandemic service levels by 2023. “With your” only concern and reason for the previous ‘neutral’ rating “being the high levels of debt and the pressure this could put on future cash flows, Wold concluded:” With management increasingly signaling the ability and willingness to use equity to reduce the debt burden, we can now be more constructive in the bullish opportunity for stocks. “