The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
There will some short term volatility, but we will be fine. The fundamentals don’t change, our cinemas are still remain closed. I believe there will be light at the ends of the tunnel. Now everyone is waiting for the debt waiver confirmation.
In the end AMC will just burn the extra capital raised to ‘stay open’ as there’re no profitable movies released at the moment.
I think the 47m equity raised is solely for their working capital purpose as they’re still opening their cinemas at the moment. Kindly take note the keyword ‘to stay open’ in the statement. In our case, our cinemas are currently closed so I don’t think Cineworld will consider the RI option to dilute the shares further. The AMC share price also declined further after the RI announcement.
One more company is joining the final race for vaccine!
https://www.google.co.uk/amp/s/www.ndtv.com/world-news/curevacs-covid-19-vaccine-generates-immune-response-in-phase-1-trial-2319525%3famp=1&akamai-rum=off
If you’re not planning to buy more just switch off your trading screen and come back after 2 weeks. Cheers.
It’s doing great so far!
Well, there are strong reasons why I opt to invest in Cineworld recently although it’s heavily geared. As I think the problem they’re facing now can be solved with some turnaround strategies. Firstly, they did the right move by become the first mover and shut down all the theatres to cut down the labor costs. They can even further scale down the management team to avoid unnecessary cash burning and try to negotiate with the senior team to work on ad-hoc project basis. Next they should fully adopt online ticket selling process and scrap over the counter sales. This is to decrease the customers’ queuing time which will increase the risk of infection. During the online ticket selling process, they may bundle the ticket sales with foods, beverages, toys and merchandise before checkout. They can adopt differential pricing for the movie seating (x1 price for 1 vacant seat in between, x2 price for 2 vacant seat in between, x3 price for 3 vacant seats in between) I believe customers are willing to pay a premium price for extra comfort and protection. According to my friend who si working in this industry, the gross profit margin of movie ticket sales is very low as they have to share 30%- 50% with the studio/distributor while most of their revenue is generated from pre-movie ads. They may consider increase the length of the ads and target the e-commerce and tech giants as their new advertisers. They may the place the ads as pop-up ads on their website homepage. They can get the job done easily mentioned above by hiring/outsourcing a good CTO. Marketing team should focus more on private/corporate sales rather than walk in sales during this period of time. For instance, they should sell the hall rather than seats to target customer. These are some of my thoughts.
If you conduct sufficient research on the movie industry, you will discover that most of the big studio’s revenue is generated from the multi-billion licensed toys’ revenue.
This can be only achieved when all the die hard fans/kids go out and spend for the toys and merchandise.
Ask yourself when is the last time you purchase a toy or merchandise after watching a movie in Netflix, Disney+ or Amazon Prime? Well, I don’t but I purchased few Avengers shirts and bottles after watching it in cinema. This explains why all the big studios are still withholding their blockbuster release. Movie tickets revenue is just a fraction of the studios’ total revenue. What the studio wants from you is the post movie sales. For instance, Disney want you to purchase their toys and merchandise and go to their theme park for movie themed rides after watching their movies. It’s like killing their own golden goose if they rush to release their major blockbuster movies on online streaming platform.
1. Expect the SP to go up North in weeks time once Pfizer release the positive news about its vaccine on early Nov. (After US election) It will also put Cineworld in better position in negotiating with its lenders. Lenders always prefer cash in return rather equity, hence debt to equity swap is highly unlikely. 2. A full lockdown in UK is likely to benefit the cinemas as the chances of theatre reopening will be higher once the cases have dropped. 3. Maybe cineworld can consider to increase the price of the movie tickets while adopting the social distancing rules. (x2 ticket price for two vacant seats in between, X3 ticket price for three vacant seats in between) This will help to absorb the losses of vacant seats. I believe many movie goers are willing to pay a premium price for extra protection. 4. Online streaming is unlikely to replace conventional cinemas. As the former is susceptible to piracy, no repeat customers and revenues will decline further as the cost of watching the movie can be shared by a group of friends. Unless the online streaming tech giant can solve the problems above. I think Mooky had pulled out a good move to shut down all the cinemas at the moment to bring down the overheads. Maybe he need to start thinking how to use the vacant cinemas to earn some extra funds while waiting for major studio release. In a nutshell I think we’re in good hands but I expect the share price