How To Train Your Dragon 2's Mediocre Opening Is A Big Deal For DreamWorks' Stock
As movie fans, we typically think of box office performance in relation to how it affects our favorite stars, directors and franchises. If Star Wars Episode VII were to open to empty theaters and $14 million for its first weekend, it would likely mean less money for newer installments and perhaps a complete severing of the relationship between JJ Abrams and Disney. What most fans wouldnít think about was how that disappointing performance might affect the Mouse Houseís bottom line. Wall Street investors, however, are not most fans, and DreamWorks Animation found that out the hard way yesterday when its stock plummeted 11% in one day from $27.35 to $24.35.
The mass sale came on the heels of How To Train Your Dragon 2ís box office numbers. The film took in $50 million, which was up about 15% from the first installment, but it was a whole lot lower than insiders were hoping for. According to The Hollywood Reporter, the optimistic number the market was hoping for was $65 million and around $800 million overall. Because of how short it fell, some analytics now think the animated film could cap out at $650 million or so, which would likely represent a nice profit but not nearly enough to counteract some other efforts that underperformed.
Itís been a struggle over the past few years for DreamWorks Animation. Rise Of The Guardians, Turbo and Mr. Peabody & Sherman all failed to break $310 million, against budgets of $135 million or higher. The Croods was a nice little beacon of light for the studio, but it still couldnít manage $600 million, which is what it typically takes now for an animated movie to be universally declared a success.
Because of all that, How To Train Your Dragon 2 was supposed to be the film that made up for all the poor performances. It was supposed to make enough money to not only be profitable but raise the collective water level and renew faith in the overall company. $650 million wonít get that done, but then again, maybe the film will prove to have longer legs than expected. Animated movies tend to make money in theaters for months, a fact Frozen proved every weekend for months. With good reviews and good word of mouth, a prolonged hold could happen too.
DreamWorks consistently churns out some of the most beautiful animation in the world. Every new film is awash with crazy camera angles and innovative little ideas. Unfortunately, the characters themselves donít always connect, and even if How To Train Your Dragon 2 is able to be what analysts were hoping it would be, the stock price likely wonít push a whole lot higher until they can turn another original story into a franchise.
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