Don’t include Wall Street among the skeptics about the potential of 3D.
During its first day of trading on the New York Stock Exchange on Friday, shares of RealD soared nearly 30% in what is the first 3D-related IPO since the “Avatar” phenomenon late last year raised hopes about the technology.
Beverly Hills-based RealD licenses 3D technology for everything from movie theaters to TV makers to eyeglasses. “Avatar” director James Cameron has agreed to serve on the RealD board of directors.
In its five year history, RLD (stock symbol) has yet to post a profit. Still, on Friday that didn’t seem to be a problem for investors. Shares were priced initially at $16 — higher than the anticipated $13 to $15 range — and shot up to $21 after the opening bell. By mid-afternoon, shares were still trading in the $20 range.
Hollywood executives surely were keeping a close eye on the trading as they try to figure out whether 3D is finally here to stay. Despite the enormous, record-breaking success of Avatar, which has grossed more than $2 billion, it is still not clear whether 3D can consistently attract audiences. So far this summer, major movies are earning less as a percentage of gross from 3D screens. Toy Story 3’s opening weekend in June pulled in 60% of its gross from 3D, down from the 71% that Disney’s Alice in Wonderland grossed from 3D during its opening in March.
RealD had revenues of $189 million in the year ended March 26 and posted losses of nearly $40 million. The IPO raised $200 million for RealD. In federal filing, the company said it plans to use proceeds to repay $25 million in loans coming due, and to invest in new technologies and to acquire complementary businesses. Among the potential risks in the future, RealD said in a filing that a slowdown in movie theaters converting to 3D, potential lawsuits alleging RealD infringes on intellectual property rights and even the FDA stepping in to regulate 3D eyeglasses could harm business.
The RealD IPO caps off a week with other breakthrough 3D events. The Yankees-Mariners baseball series last weekend was the first to be broadcast in 3D and the All-Star game on Tuesday from Anaheim was also broadcast in 3D. Who knows? Maybe a few Wall Street traders got the rare chance to catch the games on a 3D-enabled set, and woke up Friday morning as true believers.