This weekend one of the biggest movies of 2007 hits theatres. Get ready for Spider-Man 3 with a budget of $258 million, according to Columbia — or upward of $350 million. Spider-Man 3 already premiered overseas and reported first-day sales in those markets, which included Japan, South Korea, Germany and France, totalled $29.2 million according to Sony Corp. (SNE) (the owned studio). If only half of the companies 247WallSt follows could pull those kind of numbers, and Spidey is all fiction – unbelievable.
So all the fanfare got me thinking with my spidey-sense, if only all of us Wall Street analyts could have "market-sense" the world would be a much happier place. Far better would be if all the CEO’s and board of directors could have "common-sense", thus helping investors make sure bets and avoiding corporate negligence so that we all don’t get – caught in the web.
The creator of Spider-Man is of course perhaps the greatest American writer – Stan Lee. Stan has created or co-created Spider-Man, the Fantastic Four, the X-Men, the Hulk, Iron Man, and Daredevil during his career – not to mention all those titles have become major motion pictures. But its Marvel Entertainment Inc (MVL) that runs the show and the rights to the friendly-neighborhood-Spider-Man. Over the past year Marvel’s stock has gone up over 46% and now sits close to it’s 52-week high of $30.95. In 2005 Stan Lee filed a lawsuit against Marvel for his unpaid share of profits from Marvel movies, winning a settlement of more than $10 million. How’s that for poetic justice?
Most of the press out on MVL lately has been that the stock is due for a correction because how many A-list characters can really pull in money like Spider-Man? Iron-Man comes out in 2008 and they are working on a new Hulk movie, but they also put out so-so movies like Blade: Trinity, Fantastic Four, Daredevil, Ghost Rider, and worst of all – Elektra. Funny that Ben Affleck and Jennifer Garner starred in two of the worst movies in the Marvel chain. However Ben, rather, "Bennifer" get perhaps the most coveted award as the worst movie in history starring together in…GIGLI. I know you all remember the "buzz" around that movie, the tag line was great too: "GIGLI: Life doesn’t play by their rules". Neither does success Slick.
David Stires from Forbes did a write-up on Marvel a few days ago and cautioned would be buyers of Marvel’s stock to consider the Spider-Man money has already been made. The stock could start to selloff, but even then, is it a buy? Most likely -no. Here’s a excerpt from his article:
Marvel has just radically changed the business model in which it licenses the rights of its characters to film studios such as Sony Corp. (SNE) Now the New York firm will produce many of its own flicks in-house, including Iron Man as its first film, in 2008. "This certainly increases the risk," says Harold Vogel, a veteran film-industry analyst who heads Vogel Capital Management. "Producing movies is a different game."
By licensing its characters to film studios, Marvel collected a portion of each movie’s profits without committing a lot of cash. Sales doubled in the past five years, to $350 million. More than half of the firm’s operating profits came from licensing. But licensing also meant that Marvel gave away most of the riches – which was particularly painful when its films became blockbusters. In the case of "Spider-Man 2," analysts estimate that Marvel received just 5 percent of Sony’s box-office take.
But I’m sure there is still money to be money from Marvel, maybe not from Bennifer, but in Hollywood life changes every 5 minutes. Still, just for fun, if I were Spider-Man I’d probably play the market and pick up some shares of WebMD (WBMD) or Spider Resources Inc. (SPQ). So take your chances with MVL shares? Maybe. But one thing is for sure, I’ll keep watching their movies and reading Stan Lee’s work. As for Bennifer, I’m still holding out for GIGLI II. But with great power, comes great responsibility.
Frank Lara Jr.
Frank Lara Jr. can be reached at email@example.com; he does not own securities in the companies he covers.