Cineworld shares: gripping drama with uncertain ending?

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The cinema was originally the only distribution channel for the film industry. They survived the television era by negotiating a "theatre window" agreement with film studios, where the blockbuster film must be shown in the cinema for up to 90 days. However, the Covid lock-in may lead to a huge change in viewing habits, although it is too early to say how far.

Last December

Announced that all its 2021 films will be released in the United States

The movie theater provides streaming services on the same day.

. Now, will customers who are happily watching movies on any of the number of streaming services that are emerging at home want to return to the cinema?

Cineworld must hope that customers can miss the unique entertainment value of watching movies in the cinema. But the worry is that many people will just stay at home.

Cineworld Group’s share price of £0.68 certainly looks worthwhile, a decrease of approximately 71% from the price of £2.21 before the lock-in in January 2020 and £5.76 in January 2018. If it is cheap, there must be a reason.

In fact, Cineworld Group is burdened with huge debts to fund the acquisition of a larger American film chain

Achieved in February 2018. This transaction means that Cineworld, as the chairman of Cineworld, is dealing with "serious financial challenges"

Cineworld Group acknowledged and explained why Cineworld Group had to refinance its debt last November, agreeing to abandon the bank contract, extend the term and provide a three-year loan of US$450 million. Although Regal has brought a stable source of income, the debt-to-equity ratio of Cineworld Group is approximately 337%, which is higher than 56.3% five years ago.

So, is this a stock that has been blown up, waiting for a rebound later this year? In April 2020, Cineworld’s auditors may be in a total lockdown crisis

Question whether the company can continue to operate. But a company director apparently disagreed, and later that year bought 100,000 pounds of stock at a price of 0.23 pounds per share.

Analysts believe that Cineworld is unlikely to return to profitability

. However, they predict that annual revenue will grow by 36%, and revenue is expected to reach 95.8%, far exceeding the 37.4% of its competitors.

Now that the Covid vaccination plan has finally been launched and a stable supply of film will be provided again, you would think that the prospects for Cineworld stock have greatly improved. But the cloud over Cineworld Group is over whether Netflix, Amazon, Disney+ and other streaming services have stolen the lunch of Cineworld Group.

Obviously, the challenge facing the cinema chain is how to win its customer base, which will require rare imagination and driving force. Cineworld Group needs to win customers more than most people to survive.

Please note that this article does not constitute investment advice. Investors are encouraged to do their own research or consult professional advisers in advance.

James is an experienced writer and editor. He has more than 20 years of experience in the financial services industry, especially in the field of wealth management and asset management.

Initially, he was a financial reporter for multiple leading media brands including FT Group, Financial News, Euromoney and Incisive Media, covering most aspects of the asset management industry. Recently, James turned to work as an internal content expert in the fund management and wealth management departments, including JP Morgan Asset Management, Quilter Cheviot Investment Management, AXA Investment Manager and Invesco Perpetual.

Upcoming acquisitions – Jangho Group has acquired 12.17% of Cineworld and will continue to increase its shares. After the sale of Healius stock, there is also a lot of cash now.

Now, shorts are squeezing above shorts and liquidity has become an issue. Now, Jangho owns a large number of shares-the stock price is expected to rebound sharply.

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