Marvel's Superhero Results Can't Prevent a Dramatic Stock Drop

Marvel Entertainment's (MVL) second quarter came in solid, posting a 60 percent increase in net income, and raising its full-year forecast on the boffo performance of Iron Man and The Hulk.

But its stock took a superhero-sized tumble, plummeting over 13 percent and ending the day down 11.5 percent. The problem? Marvel raised its full-year earnings outlook to between $1.55 per share and $1.75 per share on $450 million to $480 million in revenues. But those increases weren't as high as Wall Street analysts were expecting, and that's what caused the stock to dip.

Still, Marvel's stock is still up over 27 percent from a year ago, and the stock has been volatile. It's always interesting to see how slowly movie profits trickle in, and this is a perfect example. Though Iron Man hit theaters in May, this past quarter's figures don't include the box office results, though they do include the boost those movies gave the licensing division, where earnings grew 54 percent and revenues were up 45 percent.

Until Iron Man, Marvel licensed and co-financed its superhero characters to other movie studios. With Sony (SNE) making a fortune from the Spider-Man trilogy, Marvel saw the benefit of taking all that profit for itself, and distributing through a studio. The numbers are strong, but after Iron Man's unexpectedly strong, record-breaking performance, Wall Street was simply expecting more.

Comments

[brbrownjr:]

I'm sticking by my position and adding on the dips. Wall street can expect all it wants... with thousands of comic book characters waiting to come to life, MVL stock is worth every penny.

2008 Aug 08 04:20 AM

[bschu:]

We are simply seeing the effect of short term thinkers. I was happy to see MVL take their destiny into their own hands with in-house production. They will be one of my core holdings for a long time.

2008 Aug 08 02:31 PM

[rev:]

It's Sept. 15 and the market is going down the tubes, thanks to the Lehmann, Fannie Mae and Freddie Mac meltdowns. However, Marvel is doing marvelous, up .32 to $35.11. I love how these dimwit 'analysts' predict. I think that wandering gypsies with crystal balls are actually more accurate. Make Mine Marvel: Buy on the dips; just don't listen to them.

2008 Sep 15 01:00 PM