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Why Cineworld Shares Fell 14.5% After the Latest Court Hearing

Simon Mugo trader
Updated 16 Nov 2022

The Cineworld Group plc (LON: CINE) share price fell 14.5% after the final hearing of the first-day cash management requests made by the company before Judge Marvin Isgur of the US Bankruptcy Court for the Southern District of Texas.

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YOUR CAPITAL IS AT RISK


The hearing results were yet to be published at the time of writing, and we’ll update the article as soon as we get the official report of what transpired during the hearing. However, Cineworld was expected to request the judge for more leeway in managing its cash operations.

Some outlets reported that Cineworld asked the Judge to let it sell some of its US Regal Cinemas as it struggles to pay off its creditors and restructure its debt to exit the bankruptcy process. However, the company is far from exiting the process, which could drag on to March 2023.

The Governmental Bar date for the bankruptcy case is 6 March 2023, indicating that the bankruptcy proceedings could drag on to that date, which is the last deadline and beyond as the court finalises the process. 

On the business side, a slate of new blockbuster movie releases could provide some relief for Cineworld, given the excellent opening weekend for the second instalment of the Wakanda Forever movie that drove moviegoers back to cinemas.

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Still, experts predict that movie theatre attendance will be down 20% this year compared to the pre-pandemic period. The lower numbers will affect Cineworld’s revenues amid stiff competition from streaming services by media companies attracting a sizeable number of movie premieres. 

The Cineworld share price had recouped some of its earlier losses, but the company’s financial situation remains untenable, given that it had $8.8 billion in debt at the end of June. We cannot rule out a share price rally, but this prospect dims by the day. 

So, would I buy Cineworld shares? The resounding answer is no. I wouldn’t touch Cineworld shares with a ten-foot pole, and I wouldn’t recommend it to anyone. The risks are just too high, and the potential returns pale in comparison. 

*This is not investment advice.  

Cineworld share price.

The Cineworld share price fell 14.51% to trade at 4.36p, from Monday’s closing price of 5.10p.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading