Shares rise 21% in 10 days
NEW YORK — Stock in Metro-Goldwyn-Mayer Inc. has risen 21% to Thursday’s close of $23.12 over the past 10 days on positive buzz about “The Man in the Iron Mask” and deals done by the Lion with Showtime and ABC.
Thursday’s close was down fractionally from a high of $23.25 it hit earlier this week, the highest close since the Lion’s initial public offering last November, when the stock was sold at $21 but quickly slumped to a trading range of around $19.
The rally is largely credited to positive expectations about the impact of today’s opening of “Man in the Iron Mask,” which the Lion said Thursday would open in 3,101 screens — the widest release of any MGM pic.
“The company has high expectations for it, and presumably that is part of what you are seeing reflected in the stock price,” said Furman Selz analyst Stewart Halpern. He added that MGM has relatively little stock trading, so any buying that is out of the ordinary has a disproportionate impact on the stock price.
Halpern said MGM had also made some business announcements in the past few days which would have fueled investor interest, such as its licensing deal with ABC and its enhanced TV series commitment deal with Showtime.
The Showtime deal, which extended Showtime’s commitment on MGM series such as “Stargate” and “The Outer Limits,” “highlights the progress they’re making in rebuilding their TV business,” Halpern said.
He added that the ABC deal reflected “the value in their film library.”
MGM agreed. An MGM spokesman said the stock price rise was “more than just the film.”
The Lion has to hope the stock price rise is related to more than just the movie, as rallies before film openings usually are followed by sell-offs once the pic opens — regardless of the strength of the opening — as investors follow the Wall Street adage “buy on rumor, sell on fact.”