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Pixar is no longer sole master of the CGI domain.

Investors proved they think DreamWorks Animation is nearly the equal of the market dominator, shooting its shares up 39% on its first day of trading to put the toon unit's total value within spitting range of Pixar's.

Shares in the company behind "Shrek" and "Shark Tale" closed at $38.75, more than $10 above the Wednesday IPO offering price of $28.

Thursday's closing price sets DreamWorks Animation's value at about $4.15 billion, close behind Pixar's market cap of $4.56 billion.

Timing of the IPO proved particularly auspicious, coming after "Shark Tale" hit it big and with the year's highest-grossing pic, "Shrek 2," set to hit homevideo next week.

"We wanted to wait until we had released 'Shark Tale' because one of the foundations of our business is to deliver two of these movies a year," DreamWorks Animation CEO Jeffrey Katzenberg said in an interview with Daily Variety. "No company has done this before and I think it was very important to show we have the capability to do it and have high creative quality."

While investors were clearly thrilled with the chance to buy into another player in the thus far flop-free CGI biz, some on Wall Street questioned the enthusiasm.

"Unless you take very aggressive forecasts for their future film slate, the upside from the stock's current level is very limited," noted Fulcrum Global Partners media analyst Richard Greenfield.

DreamWorks is setting out to be the most ambitious animation company in the market, planning to release two toon features each year, along with direct-to-DVD pics.

Company is less enthusiastic about continuing its TV work following the disappointing debut of "Father of the Pride" on NBC. Katzenberg noted that DreamWorks isn't deficit financing the series, though, and won't take a hit in the likely event that Peacock cancels it.

Yet even with Pixar following a more modest plan of one film per year, the CGI landscape is quickly filling up with both studio and independent releases. Next year Sony and Fox are unspooling CGI pics, and Disney is releasing its first non-Pixar CGI film. Smaller companies such as Lucasfilm and Regency also have CGI films in development.

But Katzenberg said he was not concerned about the possibility that the competish will overshadow his company.

"We're confident that there's more than enough space in the marketplace to accommodate these films," he said. "We are all fully aware of every one of these movies being made, so, knowing what we know today, we don't see a glut of product."

Under his new contract, Katzenberg will spend 10% of his time dedicated to DreamWorks' live-action studio, where for the past decade he has been a leader in the company's business, marketing and distribution decisions.

Of his reduced involvement with the studio, he said, "I think a good part of (my time) will be in support of marketing and distribution, a side of the company which obviously benefits animation as well. Steven and David just signed long-term contracts, and (production president) Adam Goodman is doing a sensational job. We think the live-action company is in very good hands."

Despite the stock offering, the complicated structure of DreamWorks Animation still leaves Katzenberg and David Geffen with voting control of about 93% in the company. Also holding a sizable stake is investor and Microsoft co-founder Paul Allen, who sold 2.3 million shares for about $64.4 million in the IPO and is expected to continue to sell more of his remaining 34.6 million shares.

The IPO is believed by most on Wall Street to be driven by the need to give Allen, who has invested over $700 million in DreamWorks, an exit strategy.

Source: Variety