Shares of Cineworld Group plc (LON: CINE) were down 11.4% today as its UK cinemas remain temporarily closed despite the new government jobs support programme announced last week.
Shares of the UK’s largest cinema operator are down 87.43% this year even as experts warn that its closure could have a ripple effect across the hospitality and leisure industry.
Most Cineworld theatres operate in multiplexes housing other hospitality outlets such as the restaurants that serve cinema-goers among other establishments that benefit both directly and indirectly from the cinemas. Experts warn that the situation is likely to get worse if Cineworld theatres remain closed for months.
Mooky Greidinger, Cineworld’s CEO wrote to the government asking for direct cash support for the UK film production industry and cinema operators since the company cannot pay even a third of its workers’ salaries in order to benefit from the latest jobs support programme. The company is set to furlough 5,500 employees and pay their wages up to October 15.
The fact that England is heading into a three-tier lockdown later today after the Prime Minister’s address in order to curb the second wave of coronavirus infections that are rapidly increasing implies that Cineworld cinemas may not open for a while.
I do not expect a significant rally in Cineworld shares until the firm reopens its cinemas or an effective coronavirus vaccine becomes commercially available.
Cineworld share price
Cineworld shares today fell 11.4% to trade at 26.25p having dropped from Monday’s closing price of 29.64p.