The animated sequel drew $50 million in the domestic U.S. over the past weekend, falling short of projections that the movie would gross north of $60 million. The miss in revenue led Dreamworks' share price to sharply drop nearly 12% from $27.35 on Friday to the mid-$24 range Monday and Tuesday.
"The stock is definitely going to being volatile to opening weekends given that they only have three movies per year and they're not diversified enough with TV and other things to help offset weaker openings," said Eric Wold, an analyst with B. Riley, to Variety.
One of the reasons for the pronounced move lower is that Dreamworks is on a bit of a cold streak with its recent box office releases. Rise of the Guardians, Turbo and Mr. Peabody and Sherman all underwhelmed critics, while resulting in write-downs for the studio. Expectations were thus very high for the new How to Train Your Dragon movie, since a success would help offset some of the previous weakness.