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: Shares of RealD (NYSE: RLD  ) fell as much as 10% in early trading, on speculation that the new Harry Potter movie, while already a smash for Time Warner (NYSE: TWX  ) , isn't drawing much in the way of 3-D sales.

So what: Color me sympathetic to the sellers' plight. I mean, if Harry Potter isn't better in 3-D -- or at least enough of an improvement to merit the extra charge -- then there's little chance of RealD convincing strapped theater operators to buy more of its stereoscopic screening gear.

Now what: With the exception of poorly received superhero epic Green Lantern and the latest in Michael Bay's Transformers series, 3-D hasn't been much of a draw at the summer box office. Other big-name flicks -- including Pirates of the Caribbean: On Stranger Tides, Kung-Fu Panda 2, and Cars 2 -- saw less than 50% of receipts come from more expensive 3-D showings.

Maybe big names and big effects just aren't enough to get consumers to pay for the sort of immersive viewing RealD promises? I wouldn't be surprised -- the experience still demands glasses that haven't changed much since the 1950s. Do you agree? Disagree? Weigh in using the comments box below.

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

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Time Warner at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

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Read/Post Comments (3) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On July 18, 2011, at 5:28 PM, MBelly wrote:

    Look outside the movie theater for this stock. Live concerts and sporting events shot in 3D will re-generate interest, as well as more block buster films, however, you really want to see what they have in store in the gaming and social network scene.

  • Report this Comment On July 18, 2011, at 6:30 PM, David369 wrote:

    What do you mean the glasses haven't changed much since the 50's. You young whippersnapper! Don't guess you ever wore the folding, flimsy, one saran wrap lense red and the other one blue glasses! Heck yeah they have changed. Shoot, the RealD glasses for Harry Potter looked just like Harry's glasses and both the lenses were the same clear color.

  • Report this Comment On July 19, 2011, at 2:03 PM, Onebigmo54 wrote:

    How can you say that $265,000,000 in 3D box office alone, (over one weekend) is a failure, maybe the people who have the unrealistic 70-80% 3D draw are the problem, give me 50% of any paying customer base.

    This constant drum pounding (by the shorts) is at best disingenuous, at worst manipulative.

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