A long time ago in a galaxy far, far away, people loved Star Wars. The new film could reignite that passion.
May the Force be with you indeed. And by you, we mean every movie studio that isn't The Walt Disney Co. (DIS) since Disney is poised to see a huge payday when Star Wars Episode VII: The Force Awakens hits theaters on December 18. According to a Morgan Stanley report cited by Deadline, the latest Star Wars installment is on track to make $1.95 billion in global box office sales, a figure only topped by James Cameron's Avatar and Titanic.
In the report, Morgan Stanley's Benjamin Swinburne revises his previous forecast upward by almost 22 percent and predicts Disney will pocket $1.03 billion in profits from the movie. Overseas sales—which studios frequently blame for the lack of diversity in movies despite the success of the Fast and Furious franchise—are once again playing a big role: Swinburne expects ticket buyers to spend $1.3 billion abroad versus $650 million here in the US.
Disney won't be alone in its efforts to bring Star Wars excitement to the masses. Less than a year after acquiring Lucasfilm for $4 billion in 2012, the company expanded its merchandising agreement with toymaker Hasbro (HAS) for its Marvel and Star Wars titles through 2020. Per the terms of the deal, Hasbro has to pay Disney up to $225 million: $75 million was paid at the contract signing, and the remainder will be due when the next three Star Wars films come out (including The Force Awakens).
Then there's Electronic Arts (EA). The gaming studio signed a 10-year contract with Disney back in November 2013 that includes the creation of games that tap into the larger Star Wars universe mythology. This means that EA can make all of the games it and Disney want rather than solely focusing on games with explicit movie tie-ins. And EA is doing just that in November, one month ahead of the release of The Force Awakens, with the launch of Star Wars: Battlefront. The multiplayer game will be available for PC, PlayStation and Xbox.
Disney, EA and Hasbro all have a lot to gain from the success of The Force Awakens. The stocks are already showing encouraging signs of life with positive momentum as illustrated by their 50-day simple moving averages (SMA) exceeding their 200-day SMAs. This means that the stocks' upward movement is picking up steam, resulting in a higher average price over a shorter time frame.
Of course, Star Wars Episode VII: The Force Awakens isn't coming out for another six months, so there's a lot of time for that trend to reverse. But if anticipation for the film continues to build and analysts keep raising their forecasts, anything is possible.
Do you think The Force Awakens is driving these stocks higher? If so, will it continue to do so through opening weekend?
Click on the interactive chart to view data over time.
SMA50 at 110.51 vs. SMA200 at 103.56.
2. Electronic Arts Inc. (EA, Earnings, Analysts, Financials): Develops, markets, publishes, and distributes game software and content for video game consoles, personal computers, mobile phones, tablets and electronic readers, hand held game players, and the Internet. Market cap at $21.26B, most recent closing price at $66.58.
SMA50 at 62.86 vs. SMA200 at 56.02.
SMA50 at 72.64 vs. SMA200 at 63.49.
(List compiled by Mary-Lynn Cesar. Monthly return data sourced from Zacks Investment Research. SMA data sourced from Yahoo! Finance. All other data sourced from FINVIZ.)
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