Source: PaxForex Premium Analytics Portal, Fundamental Insight
Walt Disney was in dire need of a blockbuster to regain momentum over the weekend. Unfortunately, "Indiana Jones and the Dial of Destiny" fell short of captivating summer audiences and enticing them back to the cinemas. Despite the presence of Harrison Ford reprising his role as the adventurous archaeologist, the fifth installment of this beloved franchise managed to only garner $60 million in ticket sales domestically during its opening weekend. Internationally, it fared slightly better, amassing an additional $70 million.
Considering the film's hefty production budget, estimated to be between $250 million and $300 million, there is now a real possibility that it may fail to generate a profit. This news is undoubtedly disheartening for Disney, as well as for multiplex operators and rival movie studios. In a situation like this, perhaps it's time to follow in Dr. Jones's footsteps and delve deeper to uncover the underlying reasons behind this disappointing outcome.
Disney had been enjoying a successful streak in the past few months, dominating the box office with five out of the six highest-grossing domestic releases from November to May. However, their winning streak came to an end in June with Pixar's "Elemental" underperforming and the new Indiana Jones film failing to attract audiences.
While some may argue that the $60 million debut of "Dial of Destiny" was not entirely disastrous, it's important to consider the context. Adjusted for inflation, the previous installments of the franchise were released many years ago when ticket prices were considerably lower. Taking that into account, the film's initial performance becomes more disheartening. It opened 40% lower than "Kingdom of the Crystal Skull" released in 2008, and in terms of actual tickets sold, this time around it was a significant 59% lower based on average ticket prices.
This decline in box office numbers is a concern that extends beyond Disney. With temperatures soaring during the summer, movie theaters traditionally provide a cool escape for people seeking entertainment. However, this trend is not manifesting currently. Additionally, being an action movie, which typically draws audiences to the big screen for the full cinematic experience, the underwhelming performance of "Dial of Destiny" raises further questions. Furthermore, Warner Bros. Discovery's "The Flash" also struggling at the box office in June indicates a worrisome pattern for all those investing in high-budget superhero adventures.
It's important to remember that it's still early days for the new Indiana Jones film, much like Jones' trusty whip, it may have a long-lasting impact. Disney has witnessed similar scenarios before, such as with "Encanto." Despite a disappointing theatrical run in late 2021, the film found success as a cult favorite among audiences on Disney+ and theme park visitors.
However, the initial disappointment at the box office poses a problem for Disney investors. It will likely make the market more critical of their upcoming potential blockbusters. All attention will now shift to the release of "Haunted Mansion" later this month, followed by a potential dry spell until "The Marvels" premieres in November, just ahead of the holiday season.
Optimistic investors may argue that Disney is a diversified media stock, capable of rebounding from a movie flop by offering compelling TV shows or theme park attractions to attract audiences. However, considering the stock's lackluster performance this year, a successful hit was crucial to ignite the Disney flywheel and regain investor confidence.
As long as the price is above 87.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 90.13
- Take Profit 1: 94.00
- Take Profit 2: 100.00
Alternative scenario:
If the level of 87.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 87.00
- Take Profit 1: 84.00
- Take Profit 2: 80.00
