MW As rumors swirl of China ban on Hollywood films, what it could mean for this cinema stock

By James Rogers

High-end movie-theater operator Imax has been enjoying robust business in China

The Trump administration's wide-ranging raft of tariffs have hit China particularly hard - and Beijing's retaliatory measures could have consequences for one noted cinema stock, as well as the wider U.S. film industry.

On Wednesday, President Trump paused his so-called reciprocal tariffs on all countries for 90 days - with the exception of China, which he said would be hit with greater tariffs of 125%.

As the trade war unfolds, two influential bloggers in China posted a slew of measures that authorities are said to be considering in response to Trump's tariff hike, according to the Hollywood Reporter. The list includes "reducing or banning the import of U.S. films," the report said. The first Western outlet to cover the bloggers' posts was Bloomberg.

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High-end movie-theater operator Imax Corp. (IMAX) has being doing robust business in China. In its recent fourth-quarter results, Imax said that it had broken its box-office record with its Chinese New Year slate of films, which was up more than 90% from its previous best. This was led by the animated movie "Ne Zha 2," the highest-grossing Imax release of all time in China.

As of Dec. 31, 2024, Imax had 809 systems operating in Greater China, with an additional 237 systems in backlog, according to its latest 10-K filing.

A potential Chinese ban on U.S. movies has raised fears across the entertainment industry, according to Benchmark analyst Mike Hickey, who feels that Imax could cope in the event of a ban.

"Even if a major restriction on Hollywood imports were enacted, the strength of local-language content in China suggests the overall impact would be limited," he wrote in a note released Wednesday. "Over the past three years, local-language films have consistently accounted for approximately 50% of Imax China's total box office."

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If Hollywood titles were removed, "Imax would look to further expand its local-language pipeline and increase programming of other proven alternatives like videogames and professional sports, which have already demonstrated strong audience appeal," Hickey added.

Citing observers, the analyst noted that no formal announcement has been made by Chinese authorities and that the release schedule for several major Hollywood titles, including a superhero film dated for late April, continues to move forward without interruption.

"Skeptics argue that a blanket ban would place undue pressure on theaters, which serve as vital anchors for commercial districts in an already challenging real-estate and retail environment," he added. Benchmark has a buy rating for Imax.

In a note released last month, Benchmark said that Imax is well-positioned to shine in a tough macroeconomic environment.

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Imax shares were up 5% in late-afternoon trading Wednesday. The stock is up more than 42% in the last 12 months.

Movie-theater chain and original meme stock AMC Entertainment Holdings Inc. $(AMC)$ does not have any movie theaters in China, nor does rival Cinemark Holdings Inc. $(CNK)$. AMC shares were up 8.3% Wednesday, while Cinemark's stock was up 5.8%.

-James Rogers

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April 09, 2025 15:43 ET (19:43 GMT)

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