Can investors trade on Robert Downey Jr's acting career? Maybe.
Robert Downey Jr. has been acting since childhood, appearing in everything from Brat Pack films Less Than Zeroand Weird Science to the Emmy award-winning television series Ally McBeal. But it wasn't until the release of 2008’s Iron Man that Downey's career soared to new, movie star heights. Since then, Downey has reprised the role of billionaire-playboy-inventor-superhero Tony Stark three times, starring in 2010’s Iron Man 2, last summer's blockbuster The Avengers, and, most recently, Iron Man 3.
Walt Disney Company (DIS) and Marvel Studios' Iron Man 3 opened stateside this weekend with a gross of $175.3 million, but it’s been smashing box office records overseas for two weeks. In fact, the Hollywood Reporter writes that Iron Man 3’s $680.1 million international ticket sales have already exceeded the total global gross for bothIron Man ($585 million) and Iron Man 2 ($624 million). Forbes credits Robert Downey Jr.’s snarky appeal with a majority of the franchise and The Avengers’ success, even going as far as to call him "Hollywood's Golden Man". And it appears the several companies pursuing Iron Man 3 marketing partnerships agree. Will appearances alongside Robert Downey Jr. be able to boost their performances as well?
The Robert Downey Jr. Connection
Brands seeking promotional opportunities like sharing the limelight with Robert Downey Jr.. Dr. Pepper Snapple Group (DPS) marketed its Dr. Pepper soda with Iron Man 2 and saw 3% growth in Dr. Pepper sold that quarter. Likewise, Hershey’s (HSY) worked with Iron Man 2 for its Reese's candy, and former CEO David West noted that the promotion "drove balanced growth across core brands."
Audi, the most visible company associated with Iron Man, gave Downey an R8 Spyder to drive in Iron Man 2. The luxury car brand went on to have a record-breaking 2010 in the U.S., increasing its market share to 8.6% from 2009's 7.9%. Sales of its R8 supercar grew by 14.3%, and it was the only car in its class to experience a gain in sales volume. Volkswagen Group, Audi's parent company, also had a spectacular 2010; the car manufacturer generated a then-record operating profit of €7.1 billion, and the Associated Press reports its shares rose by 5.7% following the news. Audi has continued its relationship with Iron Man, and its latest R8, which went on sale April 11, is once again the car of choice for Tony Stark in Iron Man 3.
Last fall, when Activision Blizzard Inc. (ATVI) was worried about Call of Duty: Black Ops II losing to Microsoft's (MSFT) Halo 4, the video game publisher enlisted Guy Ritchie and Robert Downey Jr. to make an ad for the game. Not only did Call of Duty end up beating Halo, it racked up $1 billion in sales in an unprecedented 15 days. Call of Duty’s market domination helped Activision triple its earnings for the quarter, and, per Businessweek, the stock rose 11% in February when investors heard the announcement.
Within the movie industry, the Iron Man impact has been quite sizeable. Iron Man 2's earnings helped Paramount (VIAB) become the first studio to gross $1 billion domestically in 2010. Variety writes that Iron Man 2's box-office performance contributed to IMAX Corporation's (IMAX) Q2 2010 earnings of $55.6 million, an increase of 38% over the previous year. After The Avengers, Bloomberg reports Disney's profit grew by 24% to $1.88 billion from the year prior, surpassing analysts' estimates. And now that Disney has come to a revenue splitting agreement with movie theater chains AMC Entertainment (AMCX), Cinemark (CNK), and Regal Entertainment Group (RGC), those companies can also benefit from Iron Man 3’s success.
Business Section: Investing Ideas
Looking ahead, Robert Downey Jr. has one confirmed sequel to a blockbuster (Avengers 2) as well as a potential sequel to a smaller, but still successful series (Sherlock Holmes). It's been established that Downey is a huge draw, so do you think there's more upside in store for the following stocks? Perhaps that's why he rang the opening bell last week.
Interactive Chart: Press play to compare changes in average analyst ratings over the past two years.
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List Average 1-Year Return: 28%.
1. Alcatel-Lucent, S.A. (ALU, Earnings, Analysts, Financials): Provides products, solutions, and transformation services that enable service providers, enterprises, governments, and strategic industries to deliver voice, data, and video communication services to end-users worldwide. Market cap at $3.17B, most recent closing price at $1.36.
Chinese parent company TCL has a product placement deal with Iron Man 3. Alcatel's One Touch Idol phone is featured in the movie.
2. AMC Networks Inc. (AMCX, Earnings, Analysts, Financials): Operates various cable televisions' brands delivering content to audiences and a platform to distributors and advertisers in the United States and internationally. Market cap at $4.56B, most recent closing price at $63.17.
The second largest movie theater chain in America. AMC also has three overseas theaters currently showing Iron Man 3.
3. Cinemark Holdings Inc. (CNK, Earnings, Analysts, Financials): Cinemark Holdings, Inc. and its subsidiaries engage in the motion picture exhibition business. Market cap at $3.56B, most recent closing price at $30.93.
The country’s third largest movie theater chain.
4. Walt Disney Co. (DIS, Earnings, Analysts, Financials): Operates as an entertainment company worldwide. Market cap at $114.12B, most recent closing price at $63.21.
The company's Marvel Studio produced the film.
5. Hasbro Inc. (HAS, Earnings, Analysts, Financials): Engages in the design, manufacture, and marketing of games and toys. Market cap at $6.08B, most recent closing price at $47.05.
The toy maker has created a new line of action figures for the latest installment.
6. IMAX Corporation (IMAX, Earnings, Analysts, Financials): Operates as an entertainment technology company worldwide. Market cap at $1.74B, most recent closing price at $26.09.
The giant screen exhibitor is screening the film domestically and internationally.
7. Oracle Corporation (ORCL, Earnings, Analysts, Financials): Develops, manufactures, markets, distributes, and services database and middleware software, applications software, and hardware systems worldwide. Market cap at $156.21B, most recent closing price at $33.16.
Oracle/Sun Microsystem logos pop up throughout the movie.
8. RealD Inc. (RLD, Earnings, Analysts, Financials): RealD Inc. licenses stereoscopic three-dimensional or 3D technologies internationally. Market cap at $708.58M, most recent closing price at $14.22.
Viewers will wear RealD glasses when watching the film in 3D.
9. Regency Centers Corporation (REG, Earnings, Analysts, Financials): Operates as a real estate investment trust. Market cap at $5.05B, most recent closing price at $55.71.
The largest movie theater chain in the nation.
10. Verizon Communications Inc. (VZ, Earnings, Analysts, Financials): Provides communication services. Market cap at $149.92B, most recent closing price at $52.40.
Verizon FiOS is participating in partner marketing programs for the movie with sweepstakes and product placement.
By Kapitall's Mary-Lynn Cesar
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Dig Deeper: Access Company Snapshots, Charts, FilingsAlcatel-Lucent, S.A. (ALU, Chart, Download SEC Filings) AMC Networks Inc. (AMCX, Chart, Download SEC Filings) Cinemark Holdings Inc. (CNK, Chart, Download SEC Filings) Walt Disney Co. (DIS, Chart, Download SEC Filings) Hasbro Inc. (HAS, Chart, Download SEC Filings) IMAX Corporation (IMAX, Chart, Download SEC Filings) Oracle Corporation (ORCL, Chart, Download SEC Filings) RealD Inc. (RLD, Chart, Download SEC Filings) Regency Centers Corporation (REG, Chart, Download SEC Filings) Verizon Communications Inc. (VZ, Chart, Download SEC Filings)
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