The new Super Mario Bros movie is so popular that movie theater stocks are surging

April 10, 2023, 7:06 PM UTC
Staff members dressed up as Super Mario and Luigi interact with visitors on Preview Day at Super Nintendo World of Universal Studios Hollywood in Los Angeles, the United States, on Feb. 16, 2023.
Zeng Hui—Xinhua/Getty Images

Movie-theater stocks surged on Monday to extend their recent rallies after the debut of The Super Mario Bros. Movie attracted crowds reminiscent of the years before the Covid-19 pandemic.

Cinemark Holdings Inc. hit the highest level since August after saying April 8 marked the strongest day of attendance for the chain since Christmas Day 2019 with the openings of Super Mario and Air, a film about Nike Inc.’s courtship of Michael Jordan. Imax Corp. closed at the highest in more than a year after announcing that Super Mario spurred its best opening weekend ever for an animated film with $21.6 million. 

Meanwhile, AMC Entertainment Holdings Inc. closed up 6.9% following news that the weekend was the company’s third best since December 2019. Movie-theater operator Marcus Corp. followed the group higher, closing up 7.7% for its biggest gain since September 2021.

The four stocks have each notched double-digit gains so far in 2023 after several volatile years as the cinema industry slowly recovers from pandemic restrictions. The late 2022 release of Avatar: The Way of Water helped power the theater chains’ strong start to the year.

Domestic box office revenue for the first quarter of $1.7 billion was about 2% above B. Riley Securities analyst Eric Wold’s projection, he wrote in a research note Monday. While it’s still just about 72% of first quarter 2019 levels, it ties for the highest quarterly box office recovery level since the pandemic, matching fourth quarter 2021, when Spider-Man: No Way Home was released, he wrote.

Wold views the recent strength in theater stocks as a sign that there is increased optimism around the box-office outlook. He boosted his 12-month price targets for Cinemark, Imax and Marcus, while reiterating his buy ratings. Wold has a neutral rating on AMC. 

As theater chains continue to show progress toward returning to pre-pandemic revenue and profitability levels, “investors will feel more comfortable not only assigning pre-pandemic average valuation multiples to the stocks, but also looking forward to 2024/2025 estimates as the recovery is anticipated to more fully take hold on results,” he wrote.

— With assistance from Katrina Lewis and Janet Freund.

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