IMAX (NYSE:IMAX) proves that box office Missions aren’t Impossible

IMAX Corporation (NYSE:IMAX), best known for its enormous movie screens, is fast becoming a cinematic kingmaker that can give an outsized boost to blockbusters prioritizing its proprietary cameras and technology. While Hollywood is waking up to the company’s ability to drive up box office numbers, Wall Street has yet to fully appreciate its growing influence. 

Having only 1,772 systems installed around the world by the end of last year, IMAX generated significant box office receipts for major hits like Christopher Nolan’s “Oppenheimer” and “Dune: Part Two.” The Denis Villeneuve-directed film starring Timothée Chalamet did so well on the large screens that can surpass the size of an eight-story apartment building, in fact, that IMAX said earlier this month that it would give it a second run, granting fans another chance to see the saga’s mythical sandworms up close and personal. Out of the film’s total global sales of approximately $660.8 million, IMAX screenings contributed nearly $140 million.

IMAX’s strong showings are worth paying attention to, especially as the overall movie industry is struggling, with theater attendance and box office receipts still below pre-pandemic levels. The company’s recent strength shows that customers are eager and willing to pay for premium experiences, and it hinted at “growth acceleration” expected next year when it last provided investors with forward guidance.

“We did 22% of the world, on eight-tenths of one percent of the screens,” IMAX CEO Rich Gelfond, who’s been called “the most important person for spring and summer movies,” told The Town podcast earlier this month when speaking about the latest Dune installment. “One of every four and a half tickets in the world was sold to someone who has less than one percent of the screens. If that’s not telling you what the public wants…” 

Gelfond earlier this year recounted the brutal competition that had emerged between Tom Cruise and Christopher Nolan, who both wanted the same IMAX dates for “Mission: Impossible — Dead Reckoning Part One” and “Oppenheimer.” Because of the limited number of screens around the world, the company typically only shows one film at a time. Nolan won out because he had used IMAX cameras to film his movie, and “Oppenheimer” went on to gross nearly a billion dollars worldwide with $188 million of that coming from IMAX screens. The latest Cruise flick didn’t fare as well and was widely viewed to be a box office flop. 

“Last year was not a stellar year for exhibitors, and their box office from 2019 was down around 20%,” IMAX’s Gelfond told The Town. “Our box office was essentially flat, and if you adjust it on the same currency, we would have been up from 2019. We’re in a really different business. People really want to go to IMAX.” He also pointed to the success the company has been having with local language films, alternative content like concerts and documentaries.

Wall Street seems to not be impressed, though, and the company’s shares have declined 15% over the past year despite a 25% increase in revenue in 2023. That suggests the market could be looking at the company more like a struggling movie theater chain such as AMC Entertainment Holdings (NYSE:AMC), which has declined almost 91% over the past year.

Gelfond, however, describes IMAX as more of a technology company — which would typically mean a higher price-to-earnings ratio. “In Hollywood, everyone gets it. In Wall Street, I think it takes them a little longer,” Gelfond said. “But remember, Wall Street thought streaming was the end of movies.”

Tom Cruise, meanwhile, will get those IMAX screens next summer.

“Mission Impossible 8 is being filmed with IMAX cameras,” Gelfond continued. “They’re going to do premieres in IMAX. Tom is going to lean into the IMAX of it all … After there wasn’t enough time to play both ‘Oppenheimer’ and ‘Mission’ at the same time, Tom called up and said ‘I get it.’”