IMAX Corp. stock was skyrocketing Wednesday, driven by the spectacular box-office performance of “Deadpool.”
The giant screen company’s shares were up $2.12, more than 7 percent, in mid-morning trading to $31.13 on the New York Stock Exchange, a day after rising 11 percent on Tuesday.
Investors were jumping on the bandwagon after reports that “Deadpool” generated $27.5 million at IMAX theaters during its four-day global debut, the highest ever for a February opening.
“Deadpool” set IMAX’s domestic and international records grossing $18.6 million in four days on 374 IMAX domestic screens and $8.9 million on 232 international screens.
Despite the record-breaking December success of “Star Wars: The Force Awakens,” IMAX stock had languished and was off more than 12 percent in January, and nearly 20 percent over the past three months.
It was a case of “buy the rumor, sell the news,” but it also reflected investor concerns about China’s fiscal upheaval and projections that 2016 box office might not match 2015’s.
The downspin didn’t add up for B. Riley analyst Eric Wold.
“If you account for the publicly known value of IMAX’s stake in IMAX China, the valuation of IMAX ex-China got down to $100 million late last week. So investors were saying the rest of the company outside of China was only worth $100 million. It was a ridiculous level that needed to be corrected,” he told TheWrap Wednesday.
The concerns that China’s economic problems would filter down to its box office were overly weighted, Wold said.
“While we can understand some level of concern around economic trends in China, since there has never been a meaningful correlation between box office trends and the economy here, we found it hard to believe there would be one in China,” he said.
Wold said “Deadpool” has parted the clouds over IMAX shares.
“Now that we’ve had IMAX’s box office strength continue into 2016 with ‘Star Wars’ and now ‘Deadpool,’ we believe investors are becoming more optimistic on the 2016 outlook — which can only boost optimism further into 2017-2018 when the slate really opens up,” he said.
“And with IMAX reporting Q4 results next Wednesday, we expect a strong quarter on the heels of Star Wars and associated margin expansion to only help things further,” Wold said.