RealD Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: The theater went dark this morning as RealD (NYSE: RLD  ) shares fell 12% in trading.

So what: Today, 3-D technology company RealD wasn't as exciting after a disappointing 3-D box office this weekend. BTIG analyst Rich Greenfield said only 36% of theater attendance this weekend was at 3-D movies, worse than last year.

Now what: We may be sorting out the point when we've saturated the market with everything 3-D. Consumers just aren't willing to pay extra money to bring the kids to Kung Fu Panda 2 in 3-D when the "wow" factor isn't there. Box office hits like Avatar will continue to be in demand in 3-D but not every movie fits that bill.

Today's move shows the real difference between RealD and premium 2-D or 3-D operator IMAX (NYSE: IMAX  ) , which is up today. I have made IMAX my top stock pick for 2011 partly because it can benefit no matter whether 3-D catches fire or not. I still like RealD's business, but the stock may have gotten ahead of itself for now.

Interested in more info on RealD? Add it to your watchlist.

Fool contributor Travis Hoium owns shares of IMAX. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Motley Fool newsletter services have recommended buying shares of IMAX. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (1)

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  • Report this Comment On May 31, 2011, at 5:17 PM, Gonzhouse wrote:

    Agree with IMAX assessment but disagree with liking RealD business; RLD is strictly a 3D play. 3D has been around since the 1960's and is currently in it's 6th version of its once-a-decade appearance. It is 'the next big thing' every time and inevitably disappears.

    I will admit that the improvement in technology makes it more likely to succeed this time but don't be surprised if in 2021 this entire discussion isn't replayed.

    Long IMAX and short RLD.

  • Report this Comment On May 31, 2011, at 6:36 PM, David369 wrote:

    @Gonzhouse

    I think IMAX is more of a case of "if I'm going to pay extra for 3D, I'll go with the IMAX name". RLD will probably make most of their money selling glasses for home and partnering with TV makers (like they did with Samsung). How well 3D TV will do is on the fence at this point but seems like all the TV manufacturers are getting into it. Maybe if they build them, they will be bought...eventually.

  • Report this Comment On June 01, 2011, at 9:07 AM, esackbauer wrote:

    @Gonzhouse

    3D is the way the world goes. 3D viewing is natural, because you have 2 eyes. We are still used to watch a 2-dimensional screen, so it seems the normal way. But in the moment you look at your beer can, its in 3D by nature!

    Don't compare technologies of the 60's and 70's to today technologies, enabling 3D on almost every display.

    There is already 100 times more 3D content than back in these days, and 3D is available TODAY on your TV at home or your mobile phone (HTC Evo 3D, without glasses!!).

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