The Buzz

All markets and investing news all the time

March of the penguins. Will 'Madagascar' lift DreamWorks' stock?

June 8, 2012: 4:11 PM ET

Hooray for Hollywood? DreamWorks investors hope that the latest 'Madagascar' movie is the next big hit in what's been a strong year for the movie business.

It's a battle between parasitic aliens and cute cartoon zoo animals at the multiplex this weekend.

Box office sales for Ridley Scott's "Alien" prequel "Prometheus" are unlikely to make a big dent on the bottom line of News Corp. (NWSA), since the Fox studio is just one part of the massive media empire. But DreamWorks Animation (DWA) investors clearly need "Madagascar 3: Europe's Most Wanted" to be a big hit. (I hope the reference to Europe doesn't scare away moviegoers. They might mistakenly think that the film is about Greece's possible exit from the eurozone and Spain's potential need for a banking bailout.)

DreamWorks shares could rise or fall sharply on Monday (and beyond) based on how the "Madagascar" movie opens. The company is pretty much a studio, not a more diversified media giant like News Corp., Walt Disney (DIS), Viacom (VIAB), Sony (SNE), Comcast (CMCSA) or CNNMoney parent company Time Warner (TWX). For proof of how important a box-office smash can be for a small studio, just look at Lionsgate (LGF). Shares of the studio behind "The Hunger Games" are up 53% in 2012. (Sorry, Carl Icahn!)

Related: Investors feast on the popularity of 'The Hunger Games'

DreamWorks stock is up 8% this year, a respectable jump, but it's underperformed some other media stocks like Lionsgate and Disney. Still, the studio has a pretty solid track record with its core animation franchises of Shrek, Kung Fu Panda and Madagascar.

Fortunately for DreamWorks longs, industry experts are hopeful the movie will do well -- even though the third movie in a franchise is often critically panned or scorned at the box office ... if not both. This one, though, could be more "Toy Story 3" than "Superman III."

It's been a volatile year for DreamWorks. But a strong debut for the latest 'Madagascar' could send the stock higher.

According to reports on movie industry site Box Office Mojo and trade publication The Hollywood Reporter, executives at Paramount -- the Viacom-owned studio distributing "Madagascar" for DreamWorks -- are expecting the film to gross $45 million this weekend in the U.S.

But Ben Carlson, president and co-creator of Fizziology, a social media research firm for the entertainment industry based in the not-exactly-Hollywood locale of Indianapolis, said that based on all the online buzz for the movie, he is predicting an opening weekend of well over $50 million.

The "Afro-Circus" song performed by Chris Rock's Marty the zebra character is a "funny breakout hit" online, Carlson said. He also indicated that people seem "excited" for the big screen return of the penguin characters. They've become increasingly popular with a new group of kids who may not have been around for the first two movies, thanks to a show they star in on Viacom's Nickelodeon network.

There's also the scarcity factor. Even though there have been many big hits at the box office this year, few have been kid-oriented. The last animated movie to hit theaters and do well was "Dr. Seuss' The Lorax" back in March. That might as well be the Mesozoic era as far as Hollywood (and impatient children) are concerned.

Fizziology has been tracking social buzz since late 2009, and Carlson said that watching what people blog and tweet about can often help gauge how popular a movie will be.  His firm accurately predicted that last week's "Snow White and The Huntsman" would do better than industry insiders thought. The firm also predicted that another recent third installment of a trilogy, "Men in Black 3," would be a bit of a disappointment.

Still, this isn't a foolproof method for finding box office stars and bombshells.

Carlson conceded that his firm thought "Battleship" -- which sank at the opening weekend with a mere $25.5 million in its first three days -- would do a little better than that. "Social conversation doesn't always translate to the box office," he noted.

And despite the deafening roar online for "Marvel's The Avengers," Fizziology did not think it would do as spectacularly well as it did. "The Avengers" opened with a record debut of more than $200 million.

But Carlson is confident that DreamWorks has a hit on its hands with the latest "Madagascar" installment.

If he's right, DreamWorks shareholders may want to bust out a rainbow-colored Afro on Monday and dance like Marty.

Join the Conversation
Fear & Greed
Sponsored by
About This Author
Paul Lamonica
Paul R. La Monica
Assistant Managing Editor, CNNMoney

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.

To view my watchlist

Not a member yet?

Sign up now for a free account
Stupid Stock Move of the Day
#StupidStock Move of the Day! Yes, Urban Outfitters may be finally turnings things around. But $URBN up 17%? Seems a bit excessive, no?
Most Popular
Powered by VIP.