Tech giant Amazon (AMZN) is starting to make a real impact in theaters, with Project Hail Mary becoming its biggest box office success so far. The sci-fi film, starring Ryan Gosling, has already generated more than $300 million globally just two weeks after its release, thereby making it the top-performing Amazon MGM movie to date. In addition, according to Comscore, it is also the company’s first film to pass $100 million at the domestic box office.
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New trading tool for AMZN bullsNotably, the movie’s performance has been unusually strong compared to typical Hollywood patterns. For example, ticket sales dropped only 32% in the U.S. from the first weekend to the second, and just 5% internationally, which is far better than the usual 50% to 70% decline most blockbusters see. Meanwhile, the film has earned about $165 million domestically and helped push total U.S. box office revenue to roughly $1.75 billion so far this year, up 23% from the same period last year.
This success comes at a time when the number of theatrical releases has been declining for years due to industry consolidation and changing strategies. For instance, mergers like Disney’s (DIS) acquisition of 21st Century Fox and the potential deal between Paramount (PSKY) and Warner Bros. Discovery (WBD) have raised concerns about fewer movies being made. Nevertheless, Amazon has committed to spending about $1 billion per year on theatrical films by targeting 12 to 15 releases annually, with a strong lineup already planned. As a result, the company appears well-positioned to fill a growing gap in the market.
Is Amazon a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMZN stock based on 40 Buys and three Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMZN price target of $284.30 per share implies 36% upside potential.
