The biggest stakeholder in 3D movies: RealD

Posted by Mike Luttrell

Quiz question: what is the only company that earns money on every single 3D movie ticket sale, almost irregardless of where the ticket is bought and what the film is? Answer: RealD, the company that brings 3D technology to every major theater in the US.

If you go to see a 3D movie at AMC, Cinemark, Regal, or practically any other movie theater chain, everything from the technology in the back room to the 3D glasses in those big bins is provided by RealD.
The company now wants to go public, and is working on finalizing talks with the Securities and Exchange Commission. USA Today reports that 10,750,000 shares will be up for grabs, and RealD projects they could each go for $15. About 4.75 million shares are currently owned by insiders, while 6 million will be newly issued shares.

The move comes as RealD is in the middle of a huge spending initiative to create brand awareness and get even deeper entrenched into the 3D market. The company had a net loss of $39.7 million in the first quarter of 2010 despite bringing in $148.9 million in revenue.

That's because it spent a lot of capital in investing in other 3D areas - like 3D TVs, game consoles, and other consumer electronics, which hasn't paid off yet. In order to expand at the rate it wants, RealD needs a lot more capital.

So for anyone interested in an initial public offering, a price of $15 per share might seem risky for a company that just spent $40 million more than it earned, but if 3D takes off the way most analysts are predicting and RealD can get a bigger slice of that, it could prove to be very fruitful.