Key points:
- Top Gun's massive ooener boosted AMC Stiock substantially
- Minions has just had the best July 4th opening weekend ever
- So, might we see that AMC boost again?
One to watch is whether AMC Entertainment (NYSE: AMC) stock will be boosted by the box office success of the new Minions movie in the same way that it was by Top Gun. For one of the things we're looking for in markets is pattern recognition and repetition. If this, which happened in the past, led to that outcome, then we see something similar happening now, are we also going to see the same result again? If a blockbuster movie hits theatres and this leads to substantial gains in AMC Entertainment stock then is another blockbuster going to cause the same thing?
It has to be said that we're not seeing it yet – AMC stock was down 5% yesterday. But the Minions movie, “Minions: The Rise of Gru” has just had a strikingly good opening four day weekend. That four day nature of it delaying the announcement of the revenue take of course. Universal has announced that Minions has taken an estimated $125 million which makes this the best ever July 4th weekend opener.
Now, true, that's still only about half the $216 million that Top Gun's latest installment made on its first weekend. And yet it's clearly and obviously substantial revenue to the theater chains (a rough guide is that the theaters get half the ticket revenue, the movie studio the other half).
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Think on what we're trying to do with investing. Spot past patterns in the markets and then, if the same circumstances arise, hope that the same results will out. AMC stock jumped 49% on the Top Gun box office take. Average ticket price is $11 or so in the US these days. The accessory spend is another $11 or so. That accessory spend (the popcorn, a drink) flows directly to the movie theater owner. The ticket price is split with the movie studio and or distributor.
So, if a $220 million opening weekend boosts AMC by 49%, then will a $125 million one have a similar effect?
The answer is that we don't know of course. But we can think that it might and go long AMC to find out. On the other hand we were, with Top Gun, a little more in the dark about how matters were going to work out after lockdown. The theater chains were all running on low volumes, the big question was whether the audiences would return. There had been a couple of years for folk to get out of the habit after all. As it turned out yes, a marquee showing did bring the crowds back – so that was evidence of a return to normal perhaps. But the second movie that does this is less of new news than the first. So the effect could be so muted on the AMC stock price as to not even be there.
This is what markets are made of, of course, differences of view. If patterns always replicated themselves there would be no risk to investment at all, would there?
