Disney stock hits lowest since March 2020 as 'Avatar' sequel misses estimates
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Disney's (DIS) "Avatar: The Way of Water" delivered director James Cameron his first $100-million opening weekend — but missed industry expectations of $170 million-plus.
The much-anticipated sequel, which runs 3 hours and 12 minutes, secured roughly $134 million in domestic markets — tying with Warner Bros.' (WBD) "The Batman" as the fifth-highest opener of 2022, according to Comscore data.
Disney closed Monday's trading session down 4.8% — the lowest level since March 2020.
The studio had anticipated a range between $135 million to $150 million for Avatar's opening weekend.
International markets helped boost the film to a $434.5 million start after it secured $300.5 million overseas.
IMAX (IMAX) CEO Richard Gelfond told Yahoo Finance: "'Avatar: The Way or Water' is an incredible film with an A CinemaScore and great word of mouth, and based on our strong pre-sales through the coming weeks it’s a safe bet that many moviegoers are waiting until the holidays to catch it on the with the best cinematic experience possible — namely, IMAX."
"James Cameron films have a well-known history of long legs at the global box office, and we anticipate that this one will be no different," the executive added.
The film notched more than $48.8 million in global IMAX ticket sales over the weekend, breaking the record for the biggest December opening of all time. It's also the the second highest-grossing IMAX opening in history (the original "Avatar" is first on the list), as 11.2% of overall moviegoers chose to see the film on IMAX screens.
Nevertheless, shares of IMAX closed Monday's trading session down nearly 5.5%. Theatrical giants AMC Entertainment (AMC) and Cinemark (CNK) also slipped on the news, closing down about 8% and 10%, respectively.
The original "Avatar," released in 2009, secured just $77 million in its opening weekend before it went on nab $2.74 billion globally, becoming the highest grossing movie ever.
According to box office analytics platform EntTelligence, the sequel should follow similar trends. Preview night and opening day represented only 53% of sales for opening weekend — a positive sign for long-term success, since it suggests the movie is not "front-loaded" and could have sustained interest over time.
In comparison, 70% or more of opening weekend takes for superhero films typically come from preview night and opening day. Anything lower than 70% is a strong indicator of potential sustained success, the platform noted.
"My biggest cautionary tale with this movie has been to play the long game," Shawn Robbins, chief analyst at Box Office Pro, told Yahoo Finance. "There were some inflated expectations...it's not a shocker, but it does put a little bit more pressure on the film to live up to the long playability that's expected of it over the next few weeks."
The "Avatar" sequel carried a reported production budget of $250 million-plus (some reports have it as high as $400 million before an additional $200 million marketing spend). Cameron noted the sky-high price tag makes it "the worst business case in movie history," and will have to be the third- or fourth highest-grossing film just to break even.
"The stakes couldn't be higher," Comscore analyst Paul Dergarabedian previously told Yahoo Finance, noting the film's rare China release will be a "big benefit" as it looks to add box-office dollars.
China was the top overseas market for the sequel, with $57.1 million in opening weekend ticket sales. Still, that number was starkly below estimates of $100 million-plus as industry insiders reassess what the film's performance will ultimately look like in the country.
One risk remains China's zero-COVID policy, though recent signs have suggested a softening in that position from Beijing. Coupled with the lack of Hollywood-approved films, China's theatrical ecosystem has been a drag for U.S. films, with the country's box office down 35% compared to the same point in 2021, according to data from consultancy Artisan Gateway cited by Variety.
The original "Avatar" heavily relied on foreign markets with more than $200 million of its $2.74 billion global total stemming from mainland China.
Alexandra is a Senior Entertainment and Media Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
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