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Dreammachine what’s your thought on - Cineworld has once again seemingly followed market sentiment with so many other shares plummeting today too. Is it just coincidence? If so it seems to be a coincidence that’s has been happening a lot.
Cineworld are opening next week. An advantage they have over many cinema companies is their unlimited card which ensures a steady consistent flow of income whereas other chains have to actually sell tickets first. Yes I know cinemas make a lot of money from food but this is a considerable start from the current zero.
It seems they have been doing the wise thing by delaying opening to save costs, whilst they see how other reopenings have gone and customers get more confidence to go out. Also so they can have a better schedule of films.
Next weekend gyms open up (more socialising and getting out) and it’s Eid over the weekend so I think there’ll be a lot more social activity.
Dreammachine I see your point but still not convinced the current sp and behaviour is related to the Cineworld business itself. As it has been for weeks now this stock seems to be following general market sentiment - going up and down along with much of the market. I have been tracking lots of shares and It seems unlikely their individual prospects are all linked. I think the US situation is just massively holding prices back and also CW have still not opened bookings so not giving more short term certainty.
I'm still a relative newbie to all, so could be very wrong, this but a thought on Cineworld.
There are so many doom and gloom posts about the outlook for Cineworld and how they are loaded with debt and likely to go bust and people won't be going to the movies until there is a vaccine. Much of these arguments don't seem to stack up imo. The business is well placed to really kick on once it opens its doors and it has a lot of things in its favour rather than against. I am sure even pulling out of the Cineplex deal will have been a well calculated/considered move.
The most recent Cineworld share price peak was on 8/9 June where it toyed around 100p. Since then its been on a continuous downward slide. However if I look at quite a few other shares the trend has been very similar - peaked on 8/9 June and been heading down ever since (some of these include Barclays, WHSmith, IAG, Vodafone...), all these cant all of a sudden have business models which have at the same time fallen off a cliff. It would suggest to me the market in general is quite negative at the moment - and as tills start ringing, more people come out etc, the market should pick back up - including Cineworld.
I first got into Cineworld when it plummeted down to around 20p - and kept adding over the weeks. On June 9th, I topped up again in quite a big way - which in hindsight was an error - pushing my average way up. At that point it just seemed as if it could only go in one direction - but then the USA situation really started to hit the headlines which I feel had a considerable negative effect.
I have been getting a little anxious over the past few weeks as the stock has been nudging down - but i think this is more to do with general market sentiment rather than Cineworld, and so trying to hold my nerve! Hopefully it will be back up as we get closer to opening and once it has opened.
Agree they cant survive on a couple of months of business. However I have checked seat availability for the few cinemas which are open now (Odeon, Showcase) and a considerable number of seats are sold - and this is with a pretty poor selection of movies. So not sure they would need to operate on a couple of months only.
Ultimately is society realistically going to come to a complete halt in the long term and stay indoors indefinitely until a vaccine is found (if it is ever found) - or adjust to a new type of behaviour so they can re-start social pursuits. I feel the latter is more likely.
I do believe this is going to go up considerably (eventually!).
But just strange how the company has essentially lost 25% of its value in about a week - during a week in which, they've announced a re-opening, dropped an overvalued transaction and high street footfall showing people want to get out!
Surely a good thing the Cineplex deal has fallen through - buying it at pre-Covid prices now would not seem wise. Cineworld can focus on stabilising the business over the next few months - and maybe they can go back in for Cineplex later if they want it. I just hope the market doesn't panic as I got a chunk of these shares at higher than I would have liked - so need the price to creep back up for my own short term peace of mind! lol
I bought a considerable chunk at around 93p yesterday - and so down quite a bit now. No fun being down - but I can't see any reason for this being down for too long. Even a £1 for this share is good. I've been following it since the start of the pandemic - and seen it go from 18p to 80p in just a few days and bounce around like a yo-yo. Today ive just been adding more throughout the day to get my average down.
Cinemas are going to re-open, whether its on 4th July or latest few weeks later. I read somewhere today that Tenet was scheduled for 17th July - but theres some reservation now so I think thats a negative on the price.
But ultimately, Cineworld has successfully re-structured some of its liabilities and so I don't think theres any fear in them going bust now - which I was much more worried about when I first got into there shares a few months back. Cineworld should have fewer problems with social distancing compared to a lot of places, as they run on very low average numbers per showing and they have an online booking system which already has the facility to block out seats. I personally think people are going to be itching to get back to leisure activity. I've had a Cineworld unlimited card for over 10 year and will very likely be going back regularly as soon as they re-open!
I think it will be interesting to see what the visitor numbers are like for department stores, and some of the leisure facilities when they open up next week. If they have strong visitor numbers - I think its a reasonable expectation that cinemas are going to be very popular as soon as they open as it shows people want to get out. On the other hand if the visitor numbers are low - then it suggests people may be worried about leaving home and so this could have a negative impact. Lets see how it goes - fingers crossed!
I did the same yesterday - Got carried away as it was hitting £1 - bought at .97p, thinking it might end up being the last opportunity to get in below £1 - been kicking myself ever since lol But its OK - will just have to sit tight for a few days now as im sure it will go up the closer we get to the imminent re-opening and should still make a handsome return even at that price.
Thankfully I have been picking this stock up since it was in its .20p's - as just couldn't understand the markets gloomy outlook for this company - so its cushioning yesterdays mistake (a little!).
My point about restaurants perhaps is not that strong - as restaurants do operate to very fine margins - so they are under big threat. But looking at cineworld profits prior to all this - they are not a comparison.
I feel as if I must be missing something here - with the amount of negative views on the outlook for Cineworld.
Yes, remaining closed its losing pretty much all its revenue and so no company could withstand that indefinitely. But i cant see how this is realistically going to go on indefinitely.
If any company should be able to withhold a set back like this it should be Cineworld. I think its highly unlikely that landlords would be so harsh with them to push them to administration and lose a solid tenant. Government incentives allow them to retain staff at minimal cost and reduce rates liabilities. So its mainly just a case of sitting tight for them.
When cinemas do re-open, there is going to be a huge amount of blockbusters opening up in quick succession - its going to a great time for ticket sales.
Yes depending on the severity of the virus, the operations will need to be adapted to make accommodating so a large number of people in a room more palatable for some - but this should not be impossible for companies of this size. I can think of at least 5 thinsg off the top of my head - and its not even my industry.
All this talk of streaming being the future - this has been going on for years - but cinema still always remains strong. I have a very large TV at home, netflix and other subscriptions, drawers full of treats, comfy sofa - but still rarely watch a movie at home, but usually goto the movies numerous times a month. The cinema experience is not just about watching a movie.
Unless we are saying the leisure industry in its entirety is going to all come to go bust then its likely what we are going to see is companies just adapting to new practices. Otherwise, we are saying:
- Restaurants all going to close down
- Cinemas all going to close down
- Huge football clubs and the premier league etc, just closing down forever.
Etc etc.
All of the above highly unlikely!
The severity of the situation in the USA is an issue as Cineworld is exposed there - but even that'll get figured out eventually.