Last week's financial report from IMAX (NYSE:IMAX) seemed like a blowout by most measuring sticks. Revenue rose 17% to $125.6 million, ahead of the $121.2 million analysts were targeting. The provider of enhanced theatrical screenings also saw its adjusted profit of $0.34 per share clock in ahead of the $0.32 per share Wall Street pros were modeling. 

IMAX was able to grow its box office receipts for the period, something that can't be said for the industry itself. The multiplex supersizer also had some encouraging news about how things are trending so far in the current quarter, fueled by the record-breaking IMAX performance for Black Panther. The stock still took a hit, sliding 9% for the day and 10% for the week. 

Even CEO Rich Gelfond seemed perplexed by the market's reaction. He was on CNBC as the stock was sliding, figuring that the shares would've been trading 8% higher instead of 8% lower as they were at the time. Investors didn't see it that way, so let's go over a few of the reasons why the market soured on IMAX after what a report that seemed solid on the surface. 

An IMAX ad for Ghost in the Shell with a woman standing over a person lying face up in water.

Image source: IMAX.

1. China is losing interest

More people are experiencing IMAX screenings than ever before, but it's all about new theater installations. IMAX-screened films may have sold $278 million in ticket sales worldwide -- up 13% over the past year -- but the per-screen average dipped slightly. We went from $233,000 per screen during the prior year's fourth quarter to $227,000 this time around. The per-screen tallies actually improved domestically. It was Greater China seeing its per-screen takes fall to $131,100 from $168,400 that dragged the overall performance down.

IMAX has been leaning on China as its largest market outside of the U.S., and it's naturally going to make it that much harder to install new systems if folks aren't paying a premium for the enhanced screenings. 

2. An analyst turns

Roth Capital analyst Darren Aftahi downgraded the stock from buy to neutral following the report, lowering his price target from $25.50 to $22. He appreciates IMAX's cost-cutting efforts, but he's not encouraged by the upside of the new initiatives. He's sticking to the sidelines until there's more visibility on the situation.

Aftahi wasn't the only analyst to put out an updated opinion on IMAX following the earnings release. Michael Pachter at Wedbush actually liked what he saw. He's sticking to his outperform rating, and bumping his price goal from $30 to $32. He sees growth as IMAX expands beyond Greater China, fills out its film slate, and continues to improve its cost structure. 

Analysts don't always agree, but given IMAX's challenges, it's easy to see why the market would put more weight on a bull's downgrade than another bull simply feeling a bit more bullish.

3. Getting past MoviePass

There is no shortage of potential traps for IMAX investors. From waning moviegoer interest to multiplex operators trying out non-IMAX upgrade initiatives, it's not easy running a company that expects people to pay a premium for something that they're not seeing. Another challenge comes in the form of Helios & Matheson's (OTC:HMNY) MoviePass. The service that allows members to pay $9.95 a month to see as many standard screenings as they can is a problem.

MoviePass is devaluing the moviegoing experience, but by only footing the bill for traditional showings, it could hurt IMAX ticket sales. For now, the data suggests that's not the case, as IMAX is gaining market share even as Helios & Matheson's majority-owned platform has grown from 20,000 members to 1.5 million since last summer. However, until IMAX begins to grow sustainably on a per-screen basis, this will continue to weigh down IMAX stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.