Cinema giants have seen their market valuations hammered this year.
The shutdown of circuits due to the C-19 coronavirus chaos resulted mass closings, release delays, liquidity concerns and a premium VOD disputes.
Despite a controversy about face mask requirements, things seemed to be looking up when the big exhibitors last week detailed their reopening plans for July.
But a new wave of delays of film releases due to a surge in disease cases has put pressure on exhibition stocks again and brought new uncertainty.
Last Thursday, Warner Bros. pushed Tenet from 31 July to 12 August, while Disney’s Mulan is expected to give up its 24 July release date.
The pure play exhibitors group have declined by an average of about 35% since 8 June Vs a decline of only approximately 5% for the S&P 500.
With 1-H of Y 2020 finished, the broad-based S&P 500 stock index was standing at a YTD decliner of 6.4%. Over the same frame, most cinema giants have seen their market values hammered.
The stock of UK-listed Cineworld, which owns the Regal cinemas in the US, has lost 71% YTD, while Canadian exhibition giant Cineplex, which Cineworld (OTC:CNNWF) had planned to acquire until the deal recently fell apart, has lost 70%.
While some might see a buying opportunity for depressed stocks, Wall Street analysts are recommending few exhibitor sector stocks to investors for now except for Imax Corp NYSE:IMAX), which we rate a “buy” as it has enough cash to weather this medical emergency storm for at least 2 yrs.
Continued shifts in the release schedule are something we are keeping a close eye on. And I do not see the studios irresponsibly releasing films with no audience, as shifting release dates is easy now given the lite film calendar for 2-H,
I believe that it will take a while until investor sentiment improves for cinema stocks. Will have another look in September.
Have a healthy week, Keep the Faith!