Movie studio “Cinemark” stocks soar due to the success of “Super Mario”

Super Mario tops the box office with this year’s largest opening and the best opening weekend ever for an animated film with $21.6 million.

AMC Entertainment Holdings Inc. experienced an impressive 6.9% upswing, thanks to the news that the weekend had been the company’s third most successful since December 2019. Its cohort, the movie-theater operator Marcus Corp., also saw a surge in profits, with a noteworthy 7.7% rise that marks its most significant gain since September 2021.

These four stocks have all achieved double-digit profits in 2023, a noteworthy feat after a series of volatile years, as the cinema industry slowly rebounds from the pandemic-induced restrictions. The release of Avatar: The Way of Water in late 2022 gave a significant boost to the theater chains’ auspicious start to the year.

According to B. Riley Securities analyst Eric Wold’s Monday research note, the domestic box office revenue for the first quarter of $1.7 billion surpassed his projections by approximately 2%. Although this amount is still only about 72% of the first quarter 2019 levels, it ties for the highest quarterly box office recovery level since the pandemic. This figure matches the fourth quarter of 2021, which saw the release of Spider-Man: No Way Home.

As theater chains continue to make progress in their quest to return to their pre-pandemic levels of revenue and profitability, Eric Wold believes that investors will be increasingly confident in assigning pre-pandemic average valuation multiples to the stocks, while also looking forward to 2024/2025 estimates as the industry continues to recover.