I have always held a fairly bearish position Cineworld (LSE: CINE) shares. In fact, the devastating effects of the epidemic as well as the huge pile of debt of the company have made the company much more risky for me. Last month was much more promising for the movie director, although its share price rose 14%. Over the past year, it has delivered an outstanding return of 170%, mainly because it has avoided bankruptcy and the vaccine has given shareholders reason to be optimistic. But recently, I’ve become much more bullish. The reason is here.
The return of the bond
After three delays, the new James Bond film finally hit theaters in late September. It was also released in the United States earlier this week. I think it has given Seanworld shares their tremendous growth.
The initial reaction to the new bond is extremely promising. In fact, in its opening weekend, the film grossed ইউ 25.9 million in the UK, more than any previous Bond movie. It also got great reviews, which is consistent with very fast sales tickets. Since Cineworld is the largest movie chain in the UK, it has probably benefited greatly from this increased demand.
I also think that Bond film can be a catalyst for many customers to return to cinema. In fact, when I went to see the movie (seeing my first movie since the epidemic started), it was completely full, and I was so impressed with the whole movie experience. Hopefully, it’s the same for others. This personal experience is the main reason why I changed my mind about Cineworld shares.
The risk remains
Of course, it would be unrealistic to say that a film could change the fate of Cineworld. This means that the number of risks I previously highlighted remains.
For example, the company has a long-term debt of .. 4.8 billion, while the cash is about ০০ 100 million. This is leading to higher interest payments, which the company is struggling to pay due to its current non-profitability. It has negative shareholder equity, which means its liabilities outweigh its assets. This indicates a serious financial crisis.
In addition, its increasing presence Netflix, Disney Plus and Amazon Prime continues to pose a threat to the health of the movie industry. This is a risk for the future.
What am I doing with Cineworld shares?
Although I’m definitely much more bullish than before, I’m still in no hurry to buy. Until I see some more signs that demand will remain outside the bond film.
However, I now feel that there could be significant upward potential in the price of Cineworld shares. As the UK currently has the shortest stock, there is a possibility of a short contraction, especially if it could gain further momentum in the next few months. Although there is no guarantee of profit, and there is still a possibility of the company falling, I am going to keep a close eye on this FTSE 250 stock.
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John McKee, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of the motley flower. Stuart Blair has no position on any of the shares mentioned. Motley Full owns shares of UK and has been recommended by Amazon, Netflix and Walt Disney. Motley Flower UK recommends the following options: long January 2022 $ 1,920 calls to Amazon and 2022 short কল 1,940 calls to Amazon. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.