'How to Train Your Dragon 2' Sinks DreamWorks Animation Stock
By Paul Bond
Shares of DreamWorks Animation were sinking 12 percent in midday trading Monday after analysts expressed disappointment in the $50 million domestic opening weekend for How to Train Your Dragon 2.
While the sequel earned about 14 percent more during its opening weekend than did the original four years ago, it was still as much as $15 million shy of Wall Street’s expectations.
The $145 million film can still turn a healthy profit if foreign markets are as strong as some predict, but lots of investors aren’t sticking around to find out, judging from the stock’s reaction Monday.
With three-and-a-half hours of trading left, the stock was down $3.15 to $24.20 on volume of nearly three times higher than average.
The film made $16 million so far in more than 15 regions, but many more markets are still to come.
Tony Wible of Janney Capital Markets cut $1 from his “fair value” of DreamWorks Animation stock down to $32 per share on Monday. He remains bullish due to the company’s TV and consumer products businesses, among others.
"We acknowledge that despite our thesis being driven by non-film businesses, sustained under-performance in film undermines this great opportunity."
Eric Wold of B. Riley told clients on Monday that he was looking for something closer to $70 million domestically out of the film, but also that he is not panicked, given it still represents the studio’s best opening in more than two years. In fact, he still is “comfortable” with his $275 million domestic prediction for How to Train Your Dragon 2.
"Animated films’ theatrical runs are typically marathons and not sprints and have much longer legs than the burn-out blockbusters of late," he wrote.