When I wrote, Cinema (London Stock Exchange: Film) The stock price is trading at 62.7p. If it ends the day near these levels, it will be the lowest level in a month. So is this my opportunity to buy? FTSE 250 Index A penny of stock, or should I run for cover?
Why did Cineworld’s share price fall?
To figure this out, I looked at recent share price drivers. It turns out that it is very sensitive to the movie’s release date. Disney will postpone the main release date to 2022 and 2023. Panther with Thor. Thank goodness, Schedule change These Marvel Studios movies seem to have nothing to do with the pandemic.They attribute to “Production Transfer”.
I think this is a better reason for delays than the uncertainty associated with the pandemic. This was the case in the past.For example, Tom Cruise’s Mission impossible with Top Gun A few months ago, the sequel was postponed to 2022 due to fears of another wave of Covid-19. For Cineworld investors, this is a greater disappointment because it is impossible to know how long this uncertainty will last. And there is always the risk that other versions may be delayed.
James Bond is weak and tense starts in October
On the other hand, the movie world Stock price rise Last month, as bookings began, demand for the latest James Bond films was strong. From mid-September to the end of the month, Cineworld’s stock price rose by approximately 36%. This blockbuster performed better than some of the recent movies in the series, providing much-needed sales growth for the locked movie theaters. I think this is exactly what is driving the stock price to rise.
But in October, the stock price started to fall again. This is partly due to the weakness of the stock market. Earlier this month, FTSE 100 The index has actually fallen below 7,000 points, raising the question of whether we can now expect the stock market to crash again. But for now, the situation seems to be improving. The stock market has recently found their magic again, and is now at pre-pandemic levels.
Why am I optimistic about Cineworld
I think investors have good confidence in cyclical stocks such as Cineworld, because it means a greater risk appetite for hard-hit movie stocks. In addition, the audience’s confidence in returning to the cinema has also increased. This could mean more movie releases and more foot traffic, especially after the long outage related to Covid-19. I’m paying close attention to the performance of the film company during the holiday season, which may also encourage the audience.
Challenge and takeaway
However, Cineworld’s stock still faces challenges. In my opinion, the biggest thing is its huge debt. In the past two years, the closure of cinemas has made the situation worse. Its continued revenue growth is critical for Cineworld’s stock price to rebound to pre-pandemic levels. I hope it will happen over time, which is why I invested in it. So yes, even if there is a risk, falling means buying to me.
Manika Premsinger Owns shares of Cineworld Group. The Motley Fool UK has no position in any of the aforementioned stocks. The views expressed by the companies mentioned in this article are those of the author and may therefore differ from the official recommendations we made in subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that taking into account a variety of different insights, We are better investors.