Why are IMAX & RealD (RLD) stocks down when Transformers & Harry Potter Movies did so well?

What's going on with IMAX & RLD stock & why are both still dropping?


Some traders are wondering why IMAX and REALD ( RLD ) stocks are down so much & not going up with the box office success of both Transformers and  Harry Potter and Deathly Hallows  Part 2


As of July 17th, 2011  Transformers – Dark of the Moon  has made over $302Million in Domestic Box Office & over $762Milllion Worldwide 

And As of July 17th, 2011 – Harry Potter had made over $169Mill in Domestic Box Office and over $481Million Worlwide 


There are still some more movies that should help #'s  into the end of 2011 full list here for remainder of 2011 at Box Office Mojo 


So what is going on ?

1) there was talk at last RLD earnings that an analyst asked if 3D is a fad  – as we can see the box office has been pretty good & a few blow out #'s

2) IMAX officer ( Richard L Gelfond) sold a bunch of IMAX shares in June 8th, 28th, 29th  30th & July 13th , 14th and 15th

look to be option exercised positions from $6.86 & $4.85 ( sold at $35.07, 30.83, $31.64 , $32.19, 28.25 & $28.64 ( He's sold some before even before stock continue higher like in Dec 2009 for $12.80 per share & in 2010 – like July when stock was $12-$13+ range so he's not picking tops. I would say these are just consistant/automatic sales  – Click Here is a full list of his sales 

as of July 15th he still owned 211,700 shares 

I don't think this was the main factor so what else is there?

3) One concern I had recently was the volume spike in sales since beginning of June .

4) This article in Forbes  sheds a bit more light & makes some sense :   "Eric Wold, of Merriman Capital, said that investors were looking for the films to generate 60% to 70% of their revenue from 3-D screens …

but ..  "Transformers earned 59% of its opening weekend box office from 3-D screens, Harry Potter earned only 43%." 
Also in same article , Richard Greenfield, an analyst with BTIG Research was actually upgrading his rating on RLD to neutral from sell since stock had slid near Greenfields $18 /share estimate. He also thought the technology could be in a 3D Bubble but not a 3D fad.
5) today in chat there was some news/rumor that we talked about of Warner Bros. actually pulling the RLD equipment out of the London Premiere of Harry Potter and replacing it with Dolby 3D – this however would not affect the current sales but could if was followed by other theather chains/ movie companies. I think its too early to jump to conclusions on this though till more news comes out.
6) I own both IMAX & RLD and have done extremely well on IMAX since Jan. 2010 after the Avatar 3D movie release – I've traded it many times – I'm still watching both positions very closely as both are at /below major key levels – If these levels hold this week i'll hold both. I don't mind holding IMAX longer even if dips down to $25 – RLD i'm a bit unsure but think even if I stop out under $19-$18 areas then I'd look for a re-entry after if based again ( as long as could stay over the lows of Aug-Oct 2010 ) I think the numbers for IMAX will be really good this month and didn't mind to play it into earnings.
When are earnings for IMAX ? They are scheduled for July 28th, 2011 
Here are analyst estimates for IMAX 
Hope you found this analysis helpful
Happy Trading,

Here's  an IMAX chart & analysis and RLD chart & analysis – double click on the thumbnail to see them bigger 
Posted in Charting & Analysis, Stocks, Watchlist