Imax Stock Surges After Record China Debut Of ‘The Eight Hundred’

Dade Hayes
·3 min read

Imax stock surged almost 10% Monday after the stellar debut in China for The Eight Hundred, the locally produced war epic that took in $83 million over the weekend.

Multiple Wall Street analysts have also given Imax shares a boost, reaffirming their positive ratings and noting the company’s unique strategic position as theatrical moviegoing gets back on its feet. The Eight Hundred had the best opening weekend for an international release in 2020 to date — a year indelibly marked by COVID-19, which has shuttered theaters for long stretches in most of the world.

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The stock ended the trading session at $14.39, its highest closing price since March 11. Like many media and entertainment stocks, Imax’s began 2020 on a high note, above $20, so the positive weekend news offered a drink of water after a long trip through the desert.

In China, Imax said it took in $7.5 million from The Eight Hundred across nearly 650 theaters in China despite a 50% capacity limit. The company’s theaters accounted for 6.5% of total ticket sales even though they make up only 1% of the screen count.

Eric Wold, an analyst with B. Riley, has a 12-month price target of $18 on Imax shares. In a note to clients Monday, he said the performance of The Eight Hundred has several auspicious implications for Imax. For starters, about 46% of the company’s large-format theaters are in China, with the territory representing 33% of global box office for the company.

On the equipment side of the company’s operations, the war epic was also the first Chinese production to be filmed entirely with Imax cameras, providing the latest example of a creative alliance bearing fruit. Imax is about to release Christopher Nolan’s Tenet, which was mostly shot on Imax cameras, in a major test for a Hollywood title as the industry emerges from the worst of the pandemic.

Despite pressure on theatrical overall, Imax has made the case that its creative ties and ability to get top talent to deliver singular stories designed for giant screens is a key part of its effort to stand apart from regular exhibitors. Those bespoke productions, the company says, will make its locations more desirable to ticket buyers warily navigating a reopening theatrical release landscape.

The Eight Hundred‘s blockbuster trajectory is a major positive, Wold wrote, given the operating conditions during COVID-19. “Given the capacity limitations, we would not be surprised if the demand for the Imax format has longer-than-usual legs in the coming days/weeks,” he wrote.

MKM Partners analyst Eric Handler said reports indicate Tenet is on course for a $55 million opening in China. Beyond that, he observed in a note to clients Friday, China’s National Day holiday lies ahead on October 1. That day “will see the launch of multiple high profile local language titles, including My People, My Homeland, which early projections have earning $170 million on its opening weekend,” Handler wrote.

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