Cineworld Long Term or Short?

When I first started I saw shares in Cineworld at 42p and decided to get 20 stocks (being a first timer), and read today that some law was overturned in the US which means that they can be bought by a Hollywood Company so the Shares jumped 30%.

Is it a good investment long term or do you think it will go back down again?

The div yeild seems quite high as well as the Payout, but if they get bought by a Hollywood company do you think they will change anything there?

Let me know your thoughts!!

Your in at a good price but depends on how much your prepared to loose if it went down? And maybe xmas time they could come up where about was this article I would like to take a look thank you

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I am not too bothered if I lose out as I only put £10 overall into the share but it is an interesting one as it could go either way as you say.

I am hoping they get bought by a bigger company if that is the case but historically they seemed to have been doing well until this crisis and perhaps Netflix stole their thunder too.

https://ukinvestormagazine.co.uk/cineworld-shares-soar-30-after-us-antitrust-law-dissolved/

I stuck a couple of hundred in them back in April, got in around 35-40p mark, thinking they absolutely will rebound from the lockdown. Rode it up, averaging up as I went, to their peak (£1.03ish?) and didn’t really notice the great big rebound so rode it all the way back to it’s current lows.

I’ve been averaging down the whole way. Doubled my holding once they hit 37p territory and now have 1,000 shares. Avg price 47p.

Their financials are bad, and the lawsuit with that other chain they were going to acquire before the pandemic has left them very vulnerable, but they are still the 2nd largest cinema chain in the world and I’m still confident they’ll make a comeback. In what form that will be who knows!

Will I hold them all the way back to their pre-COVID heights? Hmm… maybe. Will see how the landscape is in a couple of months and how they’ve reacted to it. My initial price target is £1 and if it accomplishes that with some strength I’ll assess incrementally (£1.25, £1.50, and so on).

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Hi Venetia1993,

Similar to @Joey_Fantana I have purchased shares as part of my “UK Recovery” portfolio. I also agree with his assessment and going long term.

Even though I understand other investors’ reasoning that people may not return to the cinema due to worries over Covid19 and the strength of Netflix. As well as inconsiderate cinema goers/ expensive confectionary etc. But my opinion is that the strength of cinemas comes from a " mass shared emotional" experience when watching films with alot of people. Something that is lacking from “at home” entertainment. Similarly with live sports, being at the stadium sharing the atmosphere, is preferable to experiencing it at home on TV. Even though the seating arrangement may be better :wink:.

Also some films are better set up to be seen in a big screen cinema than a TV screen. For me I cannot wait to see the new Bond Film or Top Gun as examples. So I think people will return but at what time scale is anyone’s guess.

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I’d toy with a little play money on them, but nothing big.
I just can’t see this business model staying around much, the movie theater system seems old and antiquated in this age of tech. When you can buy movies on every phone/tablet/pc for cheaper than the cost of driving to the cinema, I can’t see their business lasting all that long.

Plus, maybe i’m the oddity but I’d much rather watch a movie with friends at home than sit in a crowded place listening to everyone elses coughing and mad rushes to the toilets. lol

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I’d also warn against seeing Cineworld as a long-term play. I reckon big cinema chains could go the way of Blockbusters. From what I gather, Cineworld’s balance sheet makes for worrying reading too, so I’m not convinced it will ever return to pre-Covid highs.

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Would be a shame, cinema experience is much better than sitting on a couch at home.

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Tenet, Dune and A Quiet Place 2 for me! :slightly_smiling_face:

Can’t wait to go back to the cinema.

Having thought on this a bit more @Gfclappah raised a good point that interim results are due in September. And they will be ugly. So I expect it will still get worse before it gets better, but long term I love this chain. I had an unlimited card for 15yrs until my daughter arrived and I moved out to the sticks, otherwise I’d still have it, so to support them in this way is a decent alternative.

And with 1,000 shares, I’m also keen for their dividends to begin again. :wink:

Agree the model is antiquated and in a few generations time the post post millennials will likely have no interest in it…

Unless.

Unless cinema tech and experiences continue to innovate. Imax. iSense. 3D improvements. 4D. Wraparound screens. And filmmakers continuing to support the medium by catering their films to the big screen specifically. How long will it be before we have fully interactive films that immerse the audience and have them participate? True we have video games for that, but again that’s a smaller scale. If these innovations continue to offer experiences that the average cinephile can’t recreate at home, they’ll continue to have legs.

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Absolutely agree with everything you said.

I could also see a future when the film changes in real time based on feedback from the audience. So that you get to see the same film with different endings and plot lines.

Not a “Director’s cut” but an “Audience’s cut”

Would be a great benefit for your Unlimited card! :wink:

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Yeah that’s another direction it could go. Like those books you used to get where the story progressed based on the choices the reader makes the character take. Steve Jackson and Ian Livingston…?

Black Mirror already touched upon it. It’s definitely scalable.

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“choices the reader makes the character take. Steve Jackson and Ian Livingston…?”

That brings back memories :smiley:. They were called Fighting Fantasy books and you had to turn to a certain page number based on your choice.

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Fighting Fantasy! Yes! My brother and I had LOADS of them!

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Interesting outlook from everyone!

I personally have a Membership with “The Light” which is a semi-small Indie chain that have comfy seats, and spacious stuff (and some cheap wine too!).

I do hope it sticks around because it’s the Community aspect I like about the Cinemas and hope that they can reinvent themselves around a niche and actually charge less for popcorn (since it costs literally pennies).

Hoping we all do well on it long term of course! :slight_smile:

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After finding out that cinemas only receive 2% of ticket sales, I no longer begrudge the prices they (pretty much have to) charge for food.

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No you are not an oddity. That is something that annoys me as well- inconsiderate film goers. Hopefully after this pandemic is over, it may herald better and more considerate behaviour🤞

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Agree with you regarding the balance sheet. But hopefully it would be an impetus for some rationalisation and selling some unprofitable venues. So money can be ploughed into the sort of innovations outlined by @Joey_Fantana to differentiate it from home viewing.

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Another possibiltiy is that, with the new legislation, perhaps some studio or streaming giant comes in and buys them out. The innovation might likely stall in that event (unless pioneers like James Cameron and Christopher Nolan push their agendas for progression of the industry) but at least the chains will be saved. The downside being that we’d also get Netflix pushing all of it’s middle-of-the-road crap onto the big screen too…!

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I’ve just read their Financial Position, and it looks like they messed up on the Depreciation which cost them 570+ million and left them with a Profit of 180 million (after shares taken out).

The year before was 250+ million so the drop of profits is pretty small in spite of that mistake they made.

They have 4 groups of companies in the sector and seem to be otherwise healthy.

The only threat they have really is the depreciation adjustment in future and of course COVID.

I wouldn’t say they are Risky per se, but the change YoY is something like 3%, which isn’t good if they have no Cash reserves and of course, they have to adjust their Going Concern status because of COVID.

Help wanted.

Does anyone else see a cup and handle formation here? Or am I seeing what I want to see?

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