Movie theater stocks slide amid Wall Street rally
The stock market staged a big rally Tuesday, but it didn't include some of the nation's top theater circuits. Shares in Regal Entertainment and Carmike Cinemas took a hit in the wake of investor concerns about disappointing ticket sales at movie theaters, especially in the final months of 2011.
Shares in Regal -- the nation's largest circuit -- closed at $11.62, down 3% for the day and 16% in the last month. Shares in the fourth biggest chain, Carmike, closed at $6.59, down 4% for the day and 9% for the month.
The price drops came after Piper Jaffray analyst James Marsh lowered his earnings estimates and his ratings on the stocks of both cinema companies, citing an estimated overall 5% decline in fourth quarter box-office revenue. The fourth quarter results "are likely to represent a massive disappointment to investors, studios and exhibitors alike,'' Marsh wrote in a report Tuesday.
While some industry analysts have blamed high ticket prices and long-term factors such as competition from Netflix, Jaffray said "poor scheduling, over-reliance on sequels and underwhelming release schedules" were to blame for the anemic box office performance of such films as "Happy Feet 2," "Arthur Christmas" and "Hugo."
-- Richard Verrier
Photo: A scene from the movie "Alvin and the Chipmunks: Chip-Wrecked." Credit: 20th Century Fox