Yahoo Finance Time Warner Inc (TWX) Stock Boasting an Amazonian Bull Case
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Time Warner Inc (NYSE:TWX) shares are trading below their buyout price offered by AT&T Inc. (NYSE:T). Investors may be wise to take a bet here on TWX stock as a play on the deal going through. Aside from the merger or a potential disapproval of the deal, as once promised by President Donald Trump, investors have another reason to buy TWX stock. The DC Extended Universe just got a major boost from Wonder Woman, which will be a major story for the stock going forward.
Source: Jim Larrison via Flickr (modified)
Wonder Woman posted a great opening weekend with an estimated $103 million at the domestic box office. Internationally, the movie grossed an additional $125 million, including an impressive $38 million in China, beating the Chinese openings of Marvel blockbusters The Avengers and Guardians of the Galaxy. The domestic open was the 16th largest comic book adaptation opening of all time, which may not seem like an amazing feat until sequels are taken out and the open ranks sixth.
In its second weekend, Wonder Woman easily beat The Mummy, losing only 45% to gross $57 million domestically. The movie took in $205 million in ten days. In comparison, other DC movies Batman v Superman, Suicide Squad and Man of Steel saw second weekend drops of 69%, 65%, and 63% respectively. Internationally, Wonder Woman added an additional $58 million taking its total to $230 million and a global gross of $435 million.
Wonder Woman sits with a 93% on Rotten Tomatoes at the time of this writing. This comes from 295 counted review.
The score for the movie on the popular movie rating website has gotten as high as 97%, making Wonder Woman one of the highest rated in the superhero movie genre.
Wonder Woman has been one of the best-reviewed superhero movies of all time. The strong critical reception and audience scores mean the movie could gross $300 million domestically. Wonder Woman is already moving steadily up the 2017 list sitting at the fifth-highest-grossing film domestically. This gives Time Warner three movies in the top ten for the current year (with Lego Batman and Kong: Skull Island).
Time Warner now sits in fourth place for the domestic box office with a 15.2% share and $757 million from nine new movies.
All of these figures and reviews are great news for TWX stock. The company is betting big on expanding the DC Extended Universe, in a similar move to what Walt Disney Co (NYSE:DIS) Marvel unit has had success at over the years. Keep in mind that Time Warner owns the rights to all of the DC Comics characters. Disney has had to share the success of Marvel characters over time with Twenty-First Century Fox Inc (NASDAQ:FOXA) (X-Men, Fantastic Four) and Sony Corp (ADR) (NYSE:SNE) (Spider-Man).
Time Warner is expanding the DC characters into movies and television, a big bet for many business lines of the company. This is a similar move to Disney’s, taking advantage of the popularity of the comic book characters to help the television, movie, video game and consumer product lines. This is good news for TWX stock, as the company is poised to win from the AT&T buyout, or win on its own with an exciting future of comic book heroes.
In November, the next DC Extended Universe film comes with Justice League hitting the big screen on Nov. 17. This movie will be Time Warner’s attempt to replicate the success of Disney’s The Avengers. The movie will feature multiple superheroes, who have had their own individual movies, or will get them in the future. The success of Wonder Woman bodes well for the anticipation of Justice League. Fans will have to wait years for the yet-to-be-announced Wonder Woman sequel, but can see her in the ensemble movie later this year.
Time Warner has locked down dates for upcoming DC Comics related movies, but has been rather quiet about the timeline of movies in the DC Extended Universe. Coming next is Aquaman, coming Dec. 21, 2018, with Shazam coming in 2019 and Cyborg in 2020. DC also has dates lined up for 2019 and 2020 that have not been assigned specific movies yet, acting only as placeholders to try and fend off potential competition.
Rumored to be in the works are movies like Justice League 2, The Batman, a Man of Steel sequel, Gotham City Sirens, a Suicide Squad sequel, Batgirl, Justice League Dark and Nightwing. It is quite possible that Time Warner is waiting to see how successful Justice League is before announcing additional lineup details.
Wonder Woman was a very important piece for the future of TWX stock.
It is also important to note that Wonder Woman could help offset the weak performance of Time Warner’s May movie King Arthur: Legend of the Sword. Costing more than $175 million, the movie grossed less than $40 million domestically and less than $150 million worldwide. Time Warner will take a hit on this movie, but the quarterly performance could be saved by Wonder Woman.
Time Warner saw the performance of Lego Batman and Kong: Skull Island help pad its financial results for the first quarter. Overall revenue increased 6% to $7.7 billion. Operating income rose 7% to $2.2 billion. The company’s Warner Brothers segment led the way with overall revenue of $3.4 billion, and also with growth of 8%. The Warner Brothers segment continues to be the biggest revenue contributor, while the Turner segment is the biggest operating income provider. Turner revenue rose 6%, but operating income for the segment stayed flat. The HBO and Warner Brothers segments saw increases to operating income in the quarter.
The biggest thing hanging over TWX stock is the pending merger with AT&T. There is a good chance this deal goes through by the end of 2017, and shareholders will be rewarded with the buyout price. If the deal doesn’t go through, shares may see a dip, but I believe they are well positioned long term with catalysts like DC Comics movies.
As of this writing, Chris Katje did not hold a position in any of the aforementioned securities. You can reach him at @chriskatje on Twitter.
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