Hit movies rarely move studio stocks. The runaway success of the Harry Potter and Lord of the Rings films barely registered on the Time Warner (NYSE:TWX) radar. Spider-man's sticky web didn't find shares of Sony (NYSE:SNE) flying high. While one can argue that these are diversified entertainment giants, so even a blockbuster wouldn't make much of a dent, you then have to consider a pure play like Pixar (NASDAQ:PIXR). With its computer-animated features serving as Pixar's bread and butter, an enviable streak of six consecutive hit flicks has not sent the stock racing after a new release.
In fact, with the exception of last year's Finding Nemo, the company's stock has traded lower a month after each popular release. It may seem perplexing, as every Pixar film has treated the company and its distribution partner Disney (NYSE:DIS) to a bigger and better opening weekend than the feature before.
| Release | Opening | Day's Close | A Month Later | % Change |
|---|---|---|---|---|
| Toy Story | 11-22-95 | $40.75 | $25.75 | -37% |
| A Bug's Life | 11-27-98 | $48.75 | $39.50 | -19% |
| Toy Story 2 | 11-19-99 | $47.50 | $39.59 | -16% |
| Monsters, Inc. | 11-02-01 | $34.95 | $35.62 | -3% |
| Finding Nemo | 05-30-03 | $56.55 | $60.58 | +7% |
Granted, I had to take certain liberties with Toy Story's numbers as the company did not go public until a week after it made its big-screen debut. $40.75 was actually its close on its first day of trading on November 30, 1995. However, the trend seems to indicate that whether or not speculators bid up the stock before every new release, they apparently seem bent on cashing out on the news.
So that's why a historian may appear nervous while eyeing Pixar's stock closing at an all-time high of $91.34 yesterday, well above the $84.45 price it fetched when The Incredibles hit the local multiplex on November 5, 2004.
A bull's best defense would be to argue that if you view the numbers sequentially, every subsequent release has been kinder to the stock a month later than the one before. That is certainly true, and it almost forces one to consider the reason why Pixar's latest release has kept shareholders happy as well as its movie audiences.
Perhaps it's the wall of worry that was being erected before the movie came out. Would a PG rating scare away younger kids who make up a good chunk of an animated film's repeat business? Would the film's length and plot-driven story line turn parents off from testing their children's attention span? Would a movie starring humans -- or at least superhero humans -- equal the box-office magic that Pixar had achieved through toys, bugs, monsters, and marine life? Would a slate ripe with holiday releases derail a strong opening?
While euphoria may have been priced into the stock before past releases, there was some degree of apprehension this time around. Yes, the Motley Fool Stock Advisor stock recommendation is at an all-time high, but the fact that the movie's got legs -- big ol' stretchy legs like the film's maternal Elastigirl character -- is what is propping the stock higher. The movie lost just 29% of its numbers in its second weekend, and that's a sign of staying power. Its resiliency was also proven by the fact that it still took in more than twice as much as Time Warner's hyped The Polar Express release over the weekend.
Granted, we are still a few weeks away from hitting the month mark. The stock has run up a bit, so it would only be natural to see it take a breather here. Yet maybe this company that is worthy of being considered a Rule Breaker in so many ways is breaking the rules once again -- for the better.
Where do you think Pixar's stock will go from here? Is it time for a stock split? What about the company's next release? Will the studio be better off in 2006 without Disney? All this and more -- in the Pixar discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz owns all of the Pixar releases on DVD. Yes, he owns shares of Pixar too -- and Disney. Rick is also a member of the Rule Breakers research newsletter's analytical team.
