Imax, Netflix shares take a tumble
Drops due in part to concerns about competitive pressuresShares of a couple of Hollywood's recent high-climbers took a stock market tumble Wednesday, amid concerns about competitive pressures and high valuations.
Recently trading at decade highs, Imax fell 10% to $12.86, while Netflix dipped 2% to $67.55.
Imax investors may have been spooked by a research note from Merriman Curhan Ford analyst Eric Wold, who reiterated a "sell" recommendation based on AMC Entertainment's intent to expand the number of non-Imax giant-screen auditoriums in its domestic circuit.
Wold says AMC and its Enhanced Theater Experience, or ETX, represents "a larger concern" for Imax than a similar giant-screen venture by Cinemark.
"Exhibitors will begin to migrate away from Imax or increase the installations of competing 3D or large-format systems in order to retain more profitability," he said.
Wold said studios will "be the first to break ties with Imax" or alternately lower Imax's 12.5% boxoffice share.
Even with the daily drop, Imax shares have risen 230% in less than a year.
As for Netflix, its decline was moderate considering three analysts downgrades.
Netflix has had a remarkable run since going public eight years ago, with its shares trading near an all-time high of late. The stock rose 260% during the past six months.
But the trio of analysts suggested that Netflix shares have risen too high in light of competitive threats from the Internet delivery of feature films.
Nat Schindler of Merrill Lynch cut his opinion from "buy" to "underperform," while a couple of other analysts merely went to neutral ratings on the stock.
"With competitive risks likely to increase, we believe the risk-reward ratio is tilted to the negative," Schindler said.