Lionsgate Shares Plummet Following Disappointing Earnings

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Image courtesy of Lionsgate

Lionsgate shares have been hammered in the wake of disappointing earnings and the company indicating that performance is tracking under previous forecasts.

Shares slid by 27%, falling $6.92 to $18.53 in trading on the New York Stock Exchange for its lowest close in more than three years. The stock’s low trade came at $16.21 before the issue rebounding in the last hour of trading.

The company had cited a soft performance by its movies — mostly notably “The Hunger Games: Mockingjay Part 2” — as the key reason for falling short of Wall Street expectations in its earnings for its third fiscal quarter, reported after the market closed Thursday. The fourth and final “Hunger Games” movie grossed $650 million worldwide, the lowest total of the four titles in the hit Jennifer Lawrence franchise.

Lionsgate CEO Jon Feltheimer provided specifics of the impact during an earnings call Friday with analysts. “‘Mockingjay 2’ is underperforming our ultimate profit margins by over $100 million, much of which hit in our guidance period,” he explained.

Feltheimer also said the studio is tracking below its previous forecast for $1.1 billion to $1.2 billion in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in fiscal 2016, ending March 31. He did not offer specific numbers and said Lionsgate would not offer more financial guidance until May, when it will have the results of “Gods of Egypt,” which opens Feb. 26, and “Allegiant” — the third movie in the “Divergent” franchise — which debuts on March 16.

Lionsgate often updates its guidance on EBITDA on its analyst conference calls.

Lionsgate disclosed in a regulatory filing on Thursday that it plans to restart talks to acquire Starz a year after making an investment in the premium cable network. Lionsgate execs offered little guidance on that front during the conference call and would not indicate whether any talks have commenced.

Shares of Starz dropped 20% to $24.83. Lionsgate has a 15% voting stake in Starz.

J.P. Morgan analyst Alexia Quadrani reiterated her “overweight” rating Friday and said the price makes Lionsgate valuation “extremely attractive at these levels with likely stronger growth and margin expansion ahead.”

 

 

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  1. loco73 says:

    For the life of me I don’t understand how this movie “disappoints”. What exactly is the criteria for being successful these days?! Not every movie will be “Star Wars The Force Awakens”…hell I guess even the next installments in the “Star Wars” franchise won’t repeat the success “The Force Awakens” had! I thoroughly enjoyed “Mockingjay Pary 2” and thought that it was about as good a conclusion you could have for what has been a pretty remarkable movie franchise. Who did this movie “disappoint” after all? Shareholders and investors?! Are they the part of the audience that now counts the most?!

    This coming from a non-book reader (The Hunger Games books), someone who when first heard about these movies, they conjured images of the awfulness of “Twilight”. I was more dragged to see the first movie than having chosen to do s…and was well and pleasantly surprised by what I ended up seeing. I am most definitely not the target audience for these movies, but still enjoyed and appreciated them.

    Listen I get it, moviemaking is a business, sometimes even a blood sport, and that as the trend is these days, keeping track of every dollar and every penny seems to have become the be all and end all in terms of what is worth and what isn’t. But do we have to let these “analysts”, read Wall Street types, decide everything…including thedefinition of what constitutes a success or a failure?!

    I call bullshit on that and bullshit on the notion that “The Hunger Games: Mokingjay Part 2” disappointed or was a failure!

    • Try watching Battle ROyale 2.

    • therealeverton says:

      Well it’s their film and they knew how much they wanted to make from it and it failed to make that.. $213m less the the series best $103m less than the previous film, the expected low water mark, and less than even the first film.

      They explicitly state they “lost” at least $100m compared to expectations and that doesn’t include the “brand” damage that having two films disappoint a significant portion of the audience must have.

      It’s all well and good decrying the focus on business, but when your spending over $400m you HAVE to focus and the simple fact is that they are considering, whether the extra money they will end up taking from splitting the film into two, will actually be worth it in the end, given the negative effects and what they may ave made if they had just made one, more crowd pleasing, film inn the first place.

      You can’t go from $865m down to $755m then down to $652m in the modern age of franchise building and fail to consider that a disappointment. Especially when you consider that includes a 33% decrease in North American box office, still dollar for dollar, the best SINGLE market for profits.

      • therealeverton says:

        No, you’ve extrapolated too far. This was about a sequel. a series already being made. They took a risk and “paid” the cost. But if anything in this case it means they won’t sacrifice the better story telling options in favour of the one that should make them more money, because they realise that if you get the storytelling wrong, you’ll lose out financially, as they id here.

        This story actually is the reverse of your fear.

      • loco73 says:

        But this is the problem. With criteria like this it will become riskier and riskier to take any chances and make any substantive, original and imaginative movies. And we’ve already seen the effects of that . Many of the movies we now consider classics, or popular, or iconic or whatever, if judged solely by these metrics, would be considered failures and disappointments. And yes it is their movie, their money and they can think and do whatever they want. As it is their right. As is my right not to look upon this movie as a failure or a disappointment. The only thing to consider is that we have allowed money and the people managing that money, to become the measuring unit for way too many aspects of our lives…

  2. Bill B. says:

    Somehow I can’t see this as a failure, but they did make the mistake of stretching this too far and too thin. Hopefully, others will learn and stop milking one product until the cow runs dry. They usually have to get hit over the head a few times though before they finally get it.

  3. Dunstan says:

    Only in America could a movie taking in $650 million somehow disappoint financial analysts. By the way, there’s a reason the word “anal” is half of that word.

    Sure, is it possible that they should have wrapped up “The Hunger Games” in three films? Probably. But in the great scheme of things, Lionsgate will somehow survive this “disappointing” showing. “Divergent” will probably rebound for them – unless the target audience is growing tired of these boring, repetitious sequels.

  4. Ben says:

    I hope they learned now, that you don’t stretch a story to the breaking point: It was pure greed that motivated to do 3 “Hobbit” films out of a small book. It was pure greed to split the 3rd “Hunger Games” film in two parts. The result are weaker stand-alone films. This is frustrating for an audience.

    • therealeverton says:

      Love it, or hate it. The Hobbirt films were NOT based on one book, short, middling or long. It was based on much more than that and they had the story to fill the films to the satisfaction of most.

      Hunger Games didn’t and they paid the price.

  5. Mario Cruz says:

    Mocking jay part 2 was actually their most profitable film. In comparison to the other films in the franchise, it was underwhelming. However based on the estimated budget and what it made worldwide, it’s quite unfair to label it as the primary reason for their overall under performance. Witch hunter made $100 mil, costing about $90. All the pressure was on Mocking jay because they were counting on one film to carry the load. Good job to Francis Lawrence either way.

  6. Larry R. says:

    The creative executives at Lionsgate are bona-fide idiots. They wouldn’t know a good movie if it bit them in the a++

  7. TheBigBangof20thCenturyPopCulture says:

    They should quit the end of the world retreads or prepare to go out of business. Millennials are sick and tired of the endless stream of dystopian movies. So much so that you see them all on YouTube praising showbiz from the distant past and wishing that they lived in the pop culture good old days.

  8. Let’s Get Real Folks: Lionsgate has been on the verge of BANKRUPTCY thanks to the Tyler Perry Stinkbombs;And Also, IDK Where some Folks get their Info from(A Cereal Box,Perhaps?),But the Facts are that The Last and Final Installment of the ‘Hunger Games’ Franchise was the ONLY one to Actually Make A Profit; The Rest TANKED due Mainly to Misleading Press; So, can the Folks at Lionsgate Avoid becoming the Next Orion? Stay Tuned….

  9. The original “Battle Royale 2: Requiem” was also a massive flop. Why did they feel the need to recreate it with white folks, anyway?

  10. The Hunger Games movies, like the books, got worse in succession. They never should’ve split the finale into 2 movies.

  11. David Orsini says:

    Why is Lionsgate placing the burden upon THE HUNGER GAMES series? Any film that grosses six hundred fifty million dollars has drawn a huge audience. The moral to be found here is this: A studio should not depend upon one film alone to secure its ongoing success. Remember what happened to Twentieth Century Fox and CLEOPATRA? At any rate, I believe in Lionsgate and its leaders. They need not push the panic button. They will come through this rough patch.

  12. irwinator1992 says:

    The descent to bankruptcy is beginning. With no quality content in the pipeline, post-Hunger Games, Lionsgate is in trouble. They could probably benefit from smarter and more creative management, and cost-cutting.

  13. LOL says:

    They need to try and emulate the Michael De Luca era at New Line Cinema in the 1990s. That may work tricks for Lionsgate.

  14. Benn says:

    The results of Gods of Egypt is not going to be anything good for them.

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