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The Force Is With IMAX Stock

Whatever Jedi mind trick IMAX (NYSE: IMAX  ) CEO Richard Gelfond played on J.J. Abrams, it worked. Star Wars: Episode VII is being at least partially shot in the IMAX format.

Bad robot, good for investors
Earlier this week, Abrams gushed about the technology on the Twitter feed for his production company, Bad Robot:

"Best format ever?" Talk about an endorsement. At the very least, it suggests that Abrams is taking full advantage of IMAX's generous aspect ratio to bring epic landscapes to life on screen -- exactly what I want to see as a Star Wars fan.

Sharing is caring, and profiting
The tweet also comes as Transformers: Age of Extinction has orchestrated 2014's biggest opening weekend, including more than $10 million in IMAX sales. The movie, which was shot in IMAX 3-D, has earned more than $624 million worldwide as of this writing.

IMAX needs these kind of wins. Joint revenue-sharing arrangements -- whereby theaters get access to equipment in exchange for a cut of the box-office take -- comprised 22.5% of revenue and 27.6% of gross profit in the latest quarter.

We can expect even bigger contributions in future years. "The company continues to seek to expand its network of theaters under joint revenue-sharing arrangements, particularly in select international markets," IMAX said in its latest 10-K annual filing.

Global gains
China is a good example. As of December, 85 of IMAX's 150 local theaters were subject to joint revenue-sharing agreements. Investors like the model well enough that, in April, IMAX sold a 20% stake in its China subsidiary to CMC Capital Partners and FountainVest Partners for $80 million in proceeds.

My guess is that we'll see their bet pay off. By the end of 2013, IMAX had 263 joint-revenue-sharing systems accounting for $51.9 million in sales backlog, up 91.9% and 64.2%, respectively, over 2012's totals. Factor in a rising tide of blockbuster fare -- much of it, like Star Wars: Episode VII, shot with IMAX cameras -- and I think we're at the beginning stages of a long rally for IMAX stock.

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  • Report this Comment On July 12, 2014, at 7:41 AM, Iamforstocks wrote:

    You need to look a little deeper into revenue numbers from China before getting too excited about them. Imax revenues from Chinese BO may not be as grand as the backlog, theater count and the Boxoffice collections indicate. China returns a very small percentage of the BO collections to Hollywood and IMAX. The headline numbers for imax in China seem impressive and promote enough hype for the mgmt to dump the stock but shareholders are still waiting for the returns. Mgmt can dump stock at any price because they can get as many shares/options they want. Unfortunately , same is not true for the shareholders. Imax network and movies per year increased considerably since AVATAR yet the earnings have been patchy/declining.Why? PSAs in North America have been declining and the percentages from China/Europe are not enough to offset the declines in North America.Selling shares & stock options by the mgmt never stops either.This is my 2 cents as a long time stockholder in IMAX still waiting for reasonable returns . Good luck to all longs. I am one of you.

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Tim Beyers

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at or send email to For more insights, follow Tim on Google+ and Twitter.

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8/28/2015 4:06 PM
IMAX $32.08 Up +0.06 +0.19%
Imax CAPS Rating: ****