Cineworld shares: bull vs bear

We believe that considering a diverse range of insights makes us better investors. Here, two contributors debate Cineworld shares.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Illustration of bull and bear

Image source: Getty Images.

Bullish: Manika Premsingh

Multinational cinema operator Cineworld (LSE: CINE) went through a rough time in the pandemic. And unlike many other pandemic-impacted stocks, its share price has still not returned to pre-pandemic levels. It is highly sensitive to any Covid-19 related developments, which could potentially bring its business to a grinding halt in a flash, like it did last year.

Yet, I have been bullish on the stock for a while now and have even bought it. The reason is not hard to guess. It is one of my recovery picks, because I think that cinemas could boom as the pandemic recedes and the recovery takes hold.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Already, there are signs of improvement in Cineworld’s performance. As per its latest trading update, the company’s revenues in October were back to 90% of their pre-pandemic levels of 2019. The numbers for the UK and Ireland are particularly encouraging, since they have actually surpassed the 2019 revenues.

The rest of 2021 also looks good for it, with blockbusters like Spider-Man: No Way Home, The Matrix Resurrections and Sing 2 slated for release. 2022 is expected to be dotted with big releases as well, including those that were delayed because of Covid-19. So there is little reason to doubt, in my view, that the FTSE 250 stock could be in much better shape by this time next year.

There could be stumbling blocks along the way ,of course. It has a mountain of debt to pay off, the pandemic is still something of a challenge, and rising inflation could slow down recovery significantly, which could impact investor sentiment. On the whole, though, I am optimistic for Cineworld.

Manika Premsingh owns shares of Cineworld

Bearish: Paul Summers

I’ve been bearish on Cineworld shares for as long as I can remember. Based on the sheer number of headwinds faced by the company, I can’t see this changing any time soon.

This stance might seem odd considering the success of No Time to Die and the encouraging slate of films due for release in 2022 (including Matrix 4, Top Gun 2 and Jurassic World: Dominion). But let’s be realistic. Like the stock market, nothing is guaranteed in the movie world. Nailed-on blockbusters can be poorly received. Even better-than-expected weather can impact Cineworld’s earnings. This makes the industry pretty risky for investors, in my opinion.

In addition to this, you have the seemingly perpetual rise of streaming services such as Netflix and Amazon Prime. The shorter window of opportunity Cineworld now has between a film being shown on the silver screen and being available to watch from the comfort of my own home is worrying.

By far Cineworld’s biggest problem, however, is that massive debt pile. Even if the pandemic is nearing its final chapter, that burden will still take a long time to shift. This may be the reason why the company is easily the most shorted stock on the UK market.

The cinema operator might have the potential to make money for traders nipping in and out of positions. For a long-term investor like me, however, Cineworld simply doesn’t make the grade. 

Paul Summers has no position in any of the shares mentioned.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

How I’d invest a Stocks and Shares ISA with a 10-year time frame

Our writer explains how he focusses his Stocks and Shares investment choices by using a long-term perspective.

Read more »

UK money in a Jar on a background
Investing Articles

3 reasons to consider the 7% Legal & General dividend yield

The Legal & General dividend yield of 7% is one reason our writer would consider buying the shares for his…

Read more »

macro shot of computer monitor with FTSE 100 stock market data in trading application
Investing Articles

Should I buy this FTSE 250 defensive stock?

Jabran Khan is looking for defensive stock options for his holdings and delves deeper into this FTSE 250 food manufacturing…

Read more »

pink toy piggy money box on yellow background
Investing Articles

5 ‘no-brainer’ FTSE 250 shares to buy today

I'm seeing a lot of attractive dividend shares in the FTSE 250 right now. This approach gives me some very…

Read more »

Windmills for electric power production.
Investing Articles

The SSE share price slumps by 11%! Should I buy today?

The SSE share price tumbled today after talks of a windfall tax on electricity generators. Our writer considers if it’s…

Read more »

British Pennies on a Pound Note
Investing Articles

3 penny shares I own instead of Woodbois

Our writer prefers these three penny shares over hot stock Woodbois -- which is why he has bought them.

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Investing Articles

This FTSE 100 stock has tumbled in price. Here’s why I’d buy it now!

This FTSE 100 stock has tumbled to nearly half of its value since the start of 2022. This presents a…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

My top 5 big dividend stocks to buy before June!

With soaring inflation, I'm looking at dividend stocks to increase my returns in the near term and keep my portfolio…

Read more »