What I'm Trading

Sunday, June 20, 2010

What We've Learned this Weekend: 6/20/10

There's a snake in my boot...

1. Never doubt Pixar. Ever. 


Okay, so we didn't exactly DOUBT Pixar, but we did think $120 million for TOY STORY 3 was a bit much. And while $109 million is nothing to sneeze at, it still does not change our short position at $335.


2. People can't do math.


$109 x 2.7 = $294. So why, throughout the weekend until this morning, was TS3 trading for as high as $352??? Yes, we were all a bit emotional after TS3's monster $41 million Friday. But let's examine a few facts, shall we?
- Only one animated movie in the history of mankind has grossed over $300 million in 24 days: SHREK 2 in 2004. 

- Only one Pixar movie has ever grossed over $300 million period: FINDING NEMO in 2003 at $339 million. How long did it take for it to cross $300 million? Fifty days.
- But that was 2003. Adjusted for inflation, NEMO's overall haul would have equaled $447 million (all numbers are courtesy of our friends at BoxOfficeMojo.com). That's a 24% 2010 markup. So in 2010 dollars, NEMO would have crossed the $300 million threshold in 228.76 million 2003 dollars, or 24 days. 
- In comparison, NEMO's opening weekend was $70.2 million, or $87.1 mil today. Let's say that if NEMO had been released today, it most likely would have enjoyed all the advantages of current animation technology and exhibition, meaning it would have come out in 3D on ginormous IMAX screens a la TS3. With an additional 18% markup for IMAX and 3D screens, NEMO's opening weekend would have equated to $102.72 million today. So using the industry-standard 2.7 opening weekend multiplier to estimate 24 day performance, the most successful domestic film in Pixar history would have a current day $277.34 modern day gross. 
- Even with TOY STORY 3 running 5.8% ahead of this inflation-and-IMAX/3D-adjusted NEMO gross after this opening weekend, we still stand behind our $278 target valuation. Let's not forget that last year, the critically and audience acclaimed Pixar four-quadrant hitter UP enjoyed the same technological advantages as TS3 (okay, maybe a few less IMAX screens, but still the 3D surcharge) and grossed "only" $294 million - over the life of its run. While I have no doubt that TS3 could cross $300 million, I just don't think it will be in the first 24 days. All of those teens and tweens who grew with the TOY STORY franchise will be sucked into the Twihard vortex of ECLIPSE in five days, with mostly adults and young children left to see TS3 and THE KARATE KID.


3. JONAH HEX is the MACGRUBER of PG-13 action this summer. 


Talk about your death knells. $5.1 million? For an opening weekend??? I saw JONAH freakin' HEX. And it wasn't that freakin' bad. It also wasn't that freakin' good to overcome the critical stank ahead of it. 

And Sub-Lesson Learned: Just screen your damn movie for critics, y'all. I mean, really. I'm not saying this because I am a former movie critic myself, but because it is human nature to fear the unknown. When applied to critics, with the ability to foment and coast off of Internet speculation, people will naturally form a negative opinion when left in a vacuum of information. So by the time these critics may have to (gasp!) pay for a movie like everyone else, they're already so pissed off and antagonistic towards a movie they normally would have seen in the comfort and seclusion of a private screening room in Beverly Hills somewhere that their minds are already made up. Unless skipping advance critical reviews is the linchpin of your lowest-common-denominator marketing strategy to take that opening weekend money and run from product of questionable quality (I'm lookin' at you, Tyler Perry), just screen your damn movie. It's gonna bomb either way. But this way, it's projecting a 24 day gross of $13.77 mil. Ouch.


Please believe that after Nikki Finke's Deadline posted late Friday night estimates for the weekend for JONAH HEX, I dumped whatever remaining money I had into shorting the hell out of it, even though I was already realizing hefty profits at an average of $82 paid. Even at $65, we're at a whopping 59% profit, and climbing. If JONAH HEX actualizes its dreams of becoming one of the lowest tentpole movies this summer at $13-14 mil, we could be talking up a 79% profit. That's just plain wrong.


4. Don't doubt the power of Twitter.


There is no other explanation for why Ashton Kutcher's KILLERS still squeezed out $5 million this weekend. Surely it's because of his devoted millions-plus Twitter following that this movie isn't a glossier version of JONAH HEX at the box office. Even though we've already booked a gaudy 45% gain on this movie, a movie this uninspired should be performing even more poorly. I'm disappointed in you, Ashton. Aim low!

5. There are a lot of haters out there for Jaden Smith.

Just stop it. Hating on an 11 year old kid for being an 11 year old kid makes you sound silly, jealous, and petty. That this is a confident black kid who's the son of Hollywood royalty and has never been told he can't do something makes you haters sound like racist baller-blockers. If I were Will Smith, I would have done the same damn thing; who wouldn't want to have the ability to make their kid a movie star? Stop the hating - you're embarrassing yourselves.


So there you have it. Expect next weekend to have similarly emotional weekend fluctuations with TWILIGHT: ECLIPSE poised to open to a $100 million-plus weekend, only to recede with 62% and 70% weekend-to-weekend drops like tidewater from the sand. But here at JCC, we all know value. And we're in it for the (24 day) long haul.


Stay valued, my friends.

Posted by JCM Cinema Capital at 11:29 AM
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