'The Hunger Games' Smashes Opening Weekend Expectations, but Is the Ride Over?
Following a huge weekend for 'The Hunger Games,' Lions Gate may have more upside to come.
Oh, the irony!
I've been talking about Lions Gate's (LGF) The Hunger Games for months (see 'Twilight' and 'The Hunger Games' Put the Odds in Lions Gate's Favor), and I felt destined to see it this past weekend on a giant IMAX (IMAX) screen. I read the books, I bought the stock, and I wrote a lot of articles on it. It just made sense.
However, while The Hunger Games was making box-office history with its $155 million opening weekend, I was stuck at home, sick as a dog, watching clips from Smokey and the Bandit on YouTube.
Let's break it down.
The Hunger Games' $155 million take is the best opening ever for a nonsequel, and third-biggest overall behind Harry Potter and the Deathly Hallows: Part 2 and The Dark Knight.
This $155 million number was well above the majority of Wall Street forecasts, which hovered around the $100 to $120 million range, though some media outlets were forecasting an opening of around $140 million.
But, the bottom line is, The Hunger Games just sailed past even the most optimistic of expectations, and that means happy days are here for Lions Gate.
Remember, there are three more Hunger Games films on the way, and investors are now forced to ratchet their financial expectations upward for both future box-office performance and revenues from areas like DVDs, merchandising, digital streaming rights, and television rights.
This is vital because the "Hunger Games Trade" has been all about betting on the closing gap of awareness between the pop-culture masses and a mostly ignorant Wall Street and financial media complex. And it worked out to a tee -- the investing masses slowly caught on to The Hunger Games, and the stock went parabolic as a result.
The whole world now knows that The Hunger Games is big. The secret is gone.
However, I'm going to stay with my current Lions Gate position simply because that huge box office will keep financial expectations, as high as they may seem now, on the rise.
In addition, I am currently investigating the potential for investors to extrapolate the success of The Hunger Games to Chaos Walking, another dystopian young-adult book trilogy to which Lions Gate owns the film rights. If people get the idea, irrationally or not, that Lions Gate has another megafranchise in its back pocket, the stock's really going to move.
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