Shares of digital animation studio DreamWorks Animation (NASDAQ:DWA) fell an eye-popping 11% today after box office results for its latest creation, How to Train Your Dragon 2, fell short of expectations on its opening weekend. Unfortunately for the company's shareholders, DreamWorks has struggled to generate a consistent hit since its Shrek franchise wrapped up in 2010.
While the second installment of the stuido's How to Train Your Dragon series is likely to perform moderately well, it is leaving many shareholders wondering why they own a stake in a studio whose entire top line depends on just a few releases per year. Despite the inconsistent revenues exhibited by DreamWorks, and the corresponding importance of each and every single movie release, shareholders have room to be optimistic.
As Motley Fool consumer goods analyst Sean O'Reilly explains, DreamWorks is in the midst of diversifying its revenue streams -- with major implications for long-term shareholders.
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Sean O'Reilly has no position in any stocks mentioned. The Motley Fool recommends DreamWorks Animation. 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.