Bankruptcy Of Cineworld Is The Last Exponent Of A Sector In Check
Almost 10,000 screens located in 790 movie theaters in 10 countries. That is the main heritage of Cineworld, the second largest company in the world in the field of film exhibitors, and which will soon file for bankruptcy protection in the US.
After learning of its intention to file for bankruptcy in the United States and an insolvency proceeding in the United Kingdom, the British firm plummeted more than 80% on the London stock market, although it mitigated losses at the end of the session until closing with a 58% decline, closing at 4 pounds per share. Less than a year ago it was listed at 85 pounds per title.
That of Friday is not, however, the biggest fall of the week, since on Wednesday it left 60.38% after reporting its poor financial situation. The news has revolutionized investors, who have triggered the trading volume. The firm does not usually have a deal of more than 10 million pounds, and on Wednesday it exceeded 220 million, followed by 124 million on Thursday and more than 300 on Friday.
In a statement sent to the London stock exchange, Cineworld admits that the level of public has not returned to pre-pandemic levels due to the shortage of high-budget films that drag viewers to theaters. They expect this trend to continue until November, when the Christmas blockbuster season kicks off.
The company has stated that it aspires to “obtain additional liquidity” and “restructure its balance sheet through a comprehensive deleveraging operation”, which would significantly dilute the company’s shares.
The Cineworld case will follow that of AMC Entertainment, which was already on the verge of bankruptcy in 2021 and managed to survive thanks to raising 917 million dollars in cash, between a line of credit from its European subsidiary Odeon and the issuance of new shares in december. Its poor financial situation, in fact, turned AMC into a meme stock, triggering its volatility since the beginning of last year, a trend that has been subsiding, despite which it continues to suffer double-digit variations at least in a stock market session every month.
AMC is down more than 30% on the stock market so far this year, but its status as a meme stock has increased its value by more than 150% from pre-pandemic levels. Less lucky are IMAX, which yields 17% in 2022 and more than 10% before the coronavirus spread through the West; and Cinemark Holdings, which limits its decline to 3% this year but has lost almost half its value since February 2020.
And it is necessary to take into account that the pandemic seriously hurt the exhibiting film companies. As a first blow, the restrictions due to the coronavirus prevented the opening of theaters for months, but to top it off, they accustomed part of the public to the consumption of films on payment platforms, gaining in comfort and price despite losing in spectacularity.
According to data from Box Office Mojo, in the US the annual box office between 2015 and 2019 moved between 11,000 and 12,000 million dollars, but in 2020 it plummeted to less than a fifth, at 2,100 million. In 2021 it barely went back to 4,490 million, and in this 2022 everything indicates that they will once again stay far from pre-covid levels. At this point in the year, between 2017 and 2019, more than 7,000 million had already been collected at the US box office, while the income in 2022 to date barely exceeds 5,000 million.
In the European case, revenues amounted to 6,000 million euros in 2015 and 2016, and in 2020 they were limited to 1,700 million, doubling in 2021 to 3,400 million.