Why 'Barbenheimer' might not be enough to fuel a movie-stock rally

• The debuts of "Barbie" and "Oppenheimer" have been hotly anticipated, but don't count on a bump for movie stocks.
• JPMorgan strategists anticipate that the Hollywood actor and writer strike will keep any stock rally muted.

"Barbenheimer" is at the top of the pop culture agenda right now, but Hollywood labor disputes and uncertainty in the industry will likely cap any upside for investors holding onto movie stocks.

With "Barbie" and "Oppenheimer" debuting on the same weekend — and Tom Cruise's "Mission Impossible: Dead Reckoning" the prior week — some media experts have predicted a turning point for the film industry at large as people rush to the movies, with many enthusiasts even booking seats for back to back screenings of "Oppenheimer" and "Barbie" on the same day.

Still, the hype surrounding Margot Robbie and Cillian Murphy's blockbusters hasn't made market strategists bullish on theater company stocks like AMC Entertainment, Cinemark, Imax, and Marcus Group.

JPMorgan this week downgraded its recommendation for Cinemark, pointing to a limited film supply outlook due to the SAG-AFTRA strike. The production schedules for several movies have already been impacted, the strategists wrote in a note to clients.

"Absent a resolution," analyst David Karnovsky wrote, "we expect the strike will remain an overhang to Cinemark shares and limit upside regardless of whether the box office outperforms near term."

The S&P 500 has outperformed each of the four theater stocks since May, and extended turmoil in Hollywood threatens to weigh on the companies for the foreseeable future. Citing data from Boxoffice Pro, Bloomberg Intelligence lowered its outlook for the theater industry's revenue by 2%, to about $8.9 billion.

Earlier this month, the Screen Actors Guild announced a walkout after failing to reach a deal with the Alliance of Motion Picture & Television Producers. They joined the Writers Guild of America, which has been on strike since May.

"Actors are no longer promoting their movies, creating a demand headwind," JPMorgan's Karnovsky wrote. "The impact of this is difficult to quantify and will vary based on the film, though the recent underperformance of The Flash highlights the importance of effective marketing. While we don't think the strike will impact demand in the very near term, we do see potential risk to films dated for late summer /early fall, which could have the compounding effect of slowing box office momentum ahead of 2024."