Home Stock & Shares Movie theatre stocks dip as Cineworld suspends U.S, U.K. ops

Movie theatre stocks dip as Cineworld suspends U.S, U.K. ops

by Jonathan Adams

Cineworld’s U.S.-listed shares lost 25%, while the U.K.-listed shares fell 36.2%

Shares of movie theatre operators took a deep dive Monday, after the U.K.’s Cineworld Group PLC said it will temporarily suspend operations at all of its theatres, as the release of the latest James Bond film was delayed for a second time.

Cineworld’s move impacts its 536 Regal theatres in the U.S. and 127 Cineworld and Picturehouse theatres in the U.K., from Oct. 8. Cineworld had acquired Regal Entertainment Group for $3.6 billion in a deal that closed in February 2018.

Cineworld’s U.S.-listed shares tumbled 25.0%, paring earlier losses of as much as 50%, while the U.K.-listed shares closed down 36.2% at a near six-month low.

That weighed on shares of other movie theatre operators. Cinemark Holdings Inc.’s stock tumbled 17.4%, putting it on track for the lowest close since April 1. Trading volume swelled to 29.1 million shares, compared with the full-day average of about 7.5 million shares.

AMC Entertainment Holdings Inc. shares dropped 11.2%, and was headed for the lowest close since Aug. 4.

AMC’s stock has now lost 41.3% since it closed at a more than six-month high on Sept. 2, while Cinemark shares have shed 48.2% over the same time. Year to date, shares of AMC have shed 43.0% and Cinemark have slid 75.4%.

The U.S.-listed shares of Toronto-based Cineplex Inc. sank 26.9%, while the Canada-listed stock lost 28.4%.

BMO Capital analyst Tim Casey downgraded Cineplex to underperform from market perform, citing “elevated concerns” regarding the COVID-19 pandemic in Canada, and particularly Ontario. Casey said release postponements warrant a reduction in financial forecasts for Cineplex “and highlight potential balance sheet risk” for the company in 2021.

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