You’re probably familiar with IMAX Corporation (IMAX), which is capturing a growing slice of the box office industry, observes Frank Curzio, growth stock expert and editor of Curzio Research Advisory.
When you want to see a movie, it’s hard to beat the experience of going to an IMAX theater. The company sells or leases its IMAX theater systems to more than 1,600 venues in over 80 countries. Compared to regular movie theaters, they offer bigger, higher-resolution screens, 3D viewing, premium audio technology, and (usually) bigger, comfier seats.
Obviously, IMAX took a big hit during the pandemic. Revenues fell by more than 90% during the second quarter (Q2) of 2020 as most movie theaters closed their doors. Full-year results included a $157 million loss (compared to a $75 million profit in 2019) as sales declined 65%.
But as economies around the world reopen, IMAX is a major beneficiary. The company’s recent Q2 results included a 5x jump in revenues vs. the same period in 2020. Sales were still around half their pre-pandemic levels, but profitability continued pushing closer to breakeven.
Shares of IMAX rallied sharply ahead of these results. By early March of this year, the stock was up more than 120% in four months… and more than 300% above its March 2020 lows.
But as the Delta variant continued spreading this summer, investors headed for the exits. After trading around the $20–23 range for months, shares of IMAX plunged below $14 in late August.
Keep in mind, IMAX’s entire business relies on people going out to the movies. So it’s no surprise the stock tanked as the Delta variant ramped up. However, there’s one new data point that’s a game changer for IMAX.
Shang-Chi and the Legend of the Ten Rings — the Marvel epic recently released by Disney (DIS) — set a new record for Labor Day box office receipts. The movie raked in over $90 million in the U.S. and Canada during the four-day holiday weekend… blowing away the previous record of $30.5 million.
Labor Day weekend is usually a dead period for the movie industry. Many families are traveling and kids are going back to school… so Hollywood tends to avoid major September releases.
But these recent results blew me away. The U.S. is still in the middle of a huge spike in COVID cases. And yet, theaters sold nearly a million tickets for this latest Marvel movie. Put simply, these blockbuster results prove there’s massive pent-up demand for going to the movies.
Before the end of this year, a bunch of big-name movies are set to be released, including Venom: Let There Be Carnage, No Time to Die (a new James Bond movie), Dune, Top Gun: Maverick, Spider-Man: No Way Home, and The Matrix 4.
Plus, there’s a huge slate of blockbusters ahead for 2022, including a new Batman movie, a new John Wick movie, and new installments for the Mission Impossible and Jurassic Park franchises (and that’s just for the first half of 2022).
Most of these films were pushed back due to COVID concerns. But after the record-breaking box office results of Shang-Chi, we’ll likely see a bunch of movie releases getting pushed up.
In short, IMAX is going to be a huge beneficiary of the rebound in movie demand. These guys are going to see tremendous growth as COVID fades over the next 18–24 months.
