The news of the movie theater’s demise, to misquote Mark Twain, has been greatly exaggerated. For evidence, all one needs to do is consult the latest box office numbers released from Canadian movie theater chain Cineplex (TSE:CGX) to make the point clear. Investors are pleased as well, sending shares up over 1.5% in Thursday morning’s trading.
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June box office revenue, Cineplex noted, hit $51.8 million, which is actually a huge win for two key reasons. One, the number itself is substantial. It also represents a significant gain from June 2024’s numbers, when the theater chain took in $51.4 million. Two—and this may be the bigger point of the two—this is the first quarter since the pandemic that box office numbers hit $50 million or better for two months in a row.
A combination of factors contributed to the surging box office numbers. First, of course, was no shortage of major releases. Summer movie season is in full swing, and will deliver some of the best big-budget blockbuster productions of the year. Indeed, Cineplex itself cited the live-action remake of How to Train Your Dragon and the release of F1: The Movie as major draws for June.
The Tech Producers’ Movie Edge
There are some unsettling signs about that content pipeline, though, that have some concerned going forward. The legacy studios are seeing their theatrical slates start to shrink. But oddly enough, the vacuum left behind is set to be filled by, of all things, technology firms. Amazon (AMZN) and Apple (AAPL) are just two companies reports note are moving in to fill the gap left by the major studios.
Reports note that Amazon is actually first in line to become “…a full-fledged major Hollywood studio,” able to get its content into theaters without depending on a third party to handle distribution duties. After the next James Bond movie gets released—Universal (CMCSA) has distribution rights on that one—Amazon will be able to handle its own product exclusively, potentially giving it a substantial new revenue stream. And with technology increasingly a part of the movie-making market—just ask anyone who is terrified of movies produced by artificial intelligence—the tech firms may have an advantage getting their stuff out in front of viewers.
Is Cineplex a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:CGX stock based on four Buys and two Holds assigned in the past three months, as indicated by the graphic below. After a 32.94% rally in its share price over the past year, the average TSE:CGX price target of C$13.25 per share implies 15.72% upside potential.
