Movie theater chains could suffer in 2025 as watchers remain at home. TD Cowen analysts note that screen counts are expected to drop further this year after a decline in 2024 as the industry can’t be supported by “a handful of blockbusters.”
According to the TD Cowen analysts, it’s not streaming that’s majorly damaging the movie industry. While access to a large library of movies from the comfort of home plays a part, the biggest factor affecting moviegoers is quality.
The TD Cowen analysts point to the poor quality of recent films as the reason for the lack of interest from moviegoers. The firm highlights 2024 films, such as Joker: Folie a Deux and Madame Web as part of this issue. It also noted 2025 films that have underperformed, such as Captain America: Brave New World and Snow White.
What Role Does Disney Play in This?
One of the biggest problems that movie theater chains AMC Entertainment (AMC) and Cinemark (CNK) face is Disney (DIS). The multimedia empire will dominate the landscape in 2025 with several major releases. However, its poor performance lately could spell trouble for theaters if consumers remain unimpressed by its offerings.
The Marvel Cinematic Universe (MCU) has been spotty since the conclusion of Avengers: Endgame, and two more films in the universe, Thunderbolts* and The Fantastic Four: First Steps, are set to come out this year. Disney’s live-action remakes are also a mixed bag, and it intends to release one for Lilo & Stitch in May. Disney also has five other films that could clog up screens this year.
Should Investors Buy Movie Theater Stocks?
Investors might wonder if investing in movie theater stocks is a good idea. Turning to Wall Street, AMC has a consensus Hold rating while CNK’s is Strong Buy. CNK also offers a strong upside potential at 31.32%. Investors may also consider a stake in movie theater advertising company National Cinemedia (NCMI) with its consensus Strong Buy rating and $7.50 average price target. That’s a possible 23.56% upside for the shares.
