‘Hunger Games: Catching Fire’ Debut Drags Down Lionsgate Stock

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Opening seen as soft, but projections may have been over-inflated

Lionsgate is suffering a hangover on Monday after “The Hunger Games: Catching Fire” shattered box office records last weekend for the biggest November debut in history.

Shares of the studio plummeted more than 10 percent to close the day at just over $30. Though “The Hunger Games: Catching Fire” enjoyed a massive opening weekend of $161.1 million domestically, with some $146.6 million in ticket sales coming from foreign markets like China and Russia, its U.S. figures were softer than some analysts had anticipated. Industry observers had predicted that the film would earn as much $180 million stateside over the three-day period.

Also read: Why ‘Hunger Games’ Is Wall Street’s Favorite Movie

“The comparisons between ‘The Hunger Games’ and ‘The Avengers’ and ‘Harry Potter’ should not have been made, because they’re not really apples to apples,” Marla Backer, an analyst with Ascendiant Capital, said. “This wasn’t in 3D, so people are reacting to $160 million like it’s a shortfall, when the real takeaway is that $180 million should have been considered an outlier.”

That might not be the only culprit. Lionsgate’s stock has been on a tear in recent months, as investors eagerly awaited the release of the blockbuster sequel. Since the first film in the series debuted in March 2012, the company’s share price has more than doubled. Over the past two years, the company’s market capitalization has increased from roughly $1 billion nearly $4.5 billion.

“The stock has out-performed significantly from the first ‘Hunger Games,’ and that makes it more vulnerable to any kind of hiccup or disappointment,” Backer said.

As B. Riley senior analyst David Miller told the Wall Street Journal, the boost to Lionsgate’s bottom line from “The Hunger Games” windfall may have already been baked into its share price.

The ongoing success of the film could change attitudes, however. The Thanksgiving holiday is one of the busiest moviegoing periods in the United States, and “The Hunger Games: Catching Fire” seems well-positioned to benefit from the surge in people checking out their local multiplexes. Reviews from audiences and critics have been strong, with “The Hunger Games: Catching Fire” enjoyed an A rating from Cinemascore and an 89 percent “fresh” mark from Rotten Tomatoes.

The film is expected to easily top the roughly $700 million worldwide haul that the first film amassed last year and could end up making north of $900 million globally, analysts say.

“It’s not how it opens, it’s how it finishes,” Backer said.