Can RealD Bounce Back?

Shares of RealD (NYSE: RLD  ) are bucking the rising equity markets, losing 16% of their value last week.

A poor report on box office receipts for August pressured the outfitter of movie theaters into venues for 3-D screenings.

RealD reported on Wednesday that RealD-enabled screens took in roughly $165 million in ticket sales for the month of August. The box office tally consisted of $66 million in domestic sales and $99 million internationally.

The disappointing showing was essentially flat with RealD's performance a year earlier. The company was working on a different fiscal calendar last year, but movie theaters sold $167 million in admissions during the four weeks ending on August 17. Domestic ticket sales were up nicely, but naturally that means that international receipts fell by an even larger amount.

If we go all the way back to the beginning of the fiscal quarters, we're looking at $551 million in box office returns from RealD-enabled screens during the first eight weeks of last summer's fiscal second quarter. It was just $502 million over the slightly longer period covering July and August this year.

The decline is more prominent in that span of time, and that includes dips both here and abroad for RealD screens.

This should be a good time to be running a premium platform for enjoying movies. The economy's showing signs of life. AMC Theaters is about to go public. And at least one major player in this niche is holding up just fine.

IMAX (NYSE: IMAX  ) actually hit a new two-year high last week. 

Then again, it's probably not fair to compare RealD and IMAX anymore. RealD's most recent quarter was called "challenging" by the company as revenue slid 13%.

"Moviegoers were more selective than expected regarding the films they chose to experience in 3-D," RealD explained at the time. In other words, jaded audiences just aren't open to shelling out a few extra bucks to see a theatrical release with 3-D effects.

IMAX hasn't suffered that way. A super-sized IMAX screening remains a social event, and revenue climbed 17% in its latest quarter. Adjusted net income also grew even faster at IMAX, and that's a stark contrast to the four consecutive quarterly deficits that RealD has cranked out.

These are challenging times for RealD, as analysts see losses widening and revenue sliding through this fiscal year that ends next March. Has it just been the past year of movies that haven't been compelling enough to catch in 3-D or are customers shedding 3-D at the corner multiplex the same way they dissed 3-D televisions at consumer electronics stores over the past couple of years?

RealD will have to prove that audiences still crave 3-D without flinching for a premium before the company can truly bounce back. Moviegoers don't mind paying more if they value the experience. IMAX is living proof of that, and with an installation backlog of more than 280 screens, it's safe to say that exhibitors feel the same way about IMAX.

RealD needs to fade to black -- instead of fading in popularity -- for the stock to claw its way out of the single digits.

Lights! Camera! Traction!
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  • Report this Comment On September 18, 2013, at 1:44 PM, KarmaInvestor wrote:

    IMAX had a rise last quarter in revenue of 17% while RLD had a loss of 13% in revenue same quarter. These 2 companies basically share market control of this entire sector and the continued losses and terrible P/E of RLD showcases why the corporate officers of RLD themselves continue to be selling off MASSIVE chunks of their own stock. What confidence can it give an investor if even the CFO Drew Skarupa, sold off over $1.5m (approximately TWENTY- THIRTY percent of his entire holdings) within the past 2- 6 months, selling at 75% -50% more than the current price. What justifies the high salaried management at RLD? This is extremely frustrating for a long term investor. IMAX seems destined for success where as RLD seems destined for new management or failure.

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