Mortal Kombat, Demon Slayer post huge box office numbers ($NCMI, $IMAX, $CNK)
The movie-theaters-are-back-thesis is going mainstream as April has been the month of the box office. This past weekend was the largest ever for the box office post pandemic with ~$53mm in revenue, and Mortal Kombat marked the best ever R rated film post pandemic.

The success of Mortal Kombat and Demon Slayer this weekend combined with IMAX’s earnings release this coming Friday has me confident there is a strong probability movie theater stocks will continue to re-rate. Remember that this sector has been unloved for about a year despite domestic success after success with Croods 2, Wonder Woman 1984, Godzilla v. Kong and now Demon Slayer and Mortal Kombat. Putting aside the domestic story, movies internationally set new box records in China and Japan in 2020 despite the pandemic. For those interested, you can find a list of the all the articles I’ve written on theaters here.
Let’s review the crazy month for theaters that was April. First, Godzilla v. Kong (GvK) established a new higher mater for the box office post pandemic. Then, this weekend, Demon Slayer and Mortal Kombat both did well over $19mm in domestic box office revenue when the high end of guidance was $15mm. As previously mentioned, this weekend is the best ever during the pandemic era. GvK also moved past $400mm in overall revenue (recall the film’s budget was $155mm).
Some of the commentary on this last month:
“This weekend is another very good step,” said David A. Gross, who runs the movie consulting firm FranchiseRe. “Moviegoing should start to normalize in early June.” That’s around the time that potential blockbusters, including “A Quiet Place Part II” (May 28), “In the Heights” (June 11) and “Fast & Furious” sequel “F9” (June 25), are expected to open. – Variety
Warners also had multiple screening events with Gold House (4/22), HBCU Colleges (4/22), CAPE, Asian American Journalist Association, CAAM, East West Players, APA Women, AAPI Women Lead, C100, and more for Mortal Kombat. As we previously told you, fans went nuts over the red-band trailer, which was the second most-watched one ever (after James Gunn’s upcoming The Suicide Squad) in its first week, with over 116M views worldwide. – Deadline
Some other bullish news items:
– Ad inventory sold out for the Oscars – the demand for ad spending is bullish to me for National CineMedia as advertising at the movies is a more targeted way to reach consumers than TV. Recall National CineMedia is partly owned by Cinemark (whose CEO just joined the board), AMC and Cineworld (Regal is subsidiary). The company makes the movie trivia and other ads you see prior to trailers, and as it is paid based on the number of people it displays ads to, should benefit both from increases in movie attendance and more ad spending.
– Movie slate for back half of 2021 is loaded with blockbusters – from June onwards, there are a ton of awesome blockbusters hitting theaters. Space Jam 2, the new Fast & the Furious, A Quiet Place II, Venom 2, Top Gun 2 (hey, sequels do well), a Sopranos origins movie, a Ridley Scott historical film with Matt Damon, Ben Affleck and Adam Driver and a new James Bond. These new tentpole films will hit theaters as more theaters go to 100% capacity (we’re still extremely capacity constrained in the two largest US markets – New York and LA), more people get vaccinated and the negative stigma around going theaters becomes a distant afterthought.
The back half of 2021 could bring in 2019-like revenue for the theater names, and 2022 I expect to be on par or above 2019. For National CineMedia, this means the company right now is trading at a laughably conservative 2022 FCF yield of ~30% (the S&P is 5%) – I expect the company to reintroduce its dividend some time next year as well.
Overall, this is the most bullish I’ve been on theatrical releases since the pandemic started. April was a tremendous month for the box office. Ad spending is coming back. I continue to love the risk-reward on the theater names, specifically NCMI.
Happy trading,
Ben