The Cineworld share price bounces back from 88p! Would I buy this stock today?

first_imgThe Cineworld share price bounces back from 88p! Would I buy this stock today? Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Cliff D’Arcy | Thursday, 25th March, 2021 | More on: CINE Image source: Getty Images Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before! Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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. Enter Your Email Addresscenter_img Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! The high-calibre small-cap stock flying under the City’s radar Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. Today was a lively one for Cineworld (LSE: CINE) shares. After closing at 102.8p on Wednesday, the Cineworld share price oscillated wildly. As I write, CINE shares hover around 94.3p, down 8.5p (8.3%) overnight. But this drop masks some major price moves this morning.The Cineworld share price plummetsThis morning, the share price went into freefall. After gapping down at the open, it slumped to a low of 88.24p. That was a collapse of 14.56p, or a seventh (14.2%). However, this proved to be the low for the FTSE 250 stock, as it rebounded by over 6p. What caused this share slide? The answer is that the company released a shocking set of results for 2020.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Cineworld lost a whopping $3bn last yearCineworld is the world’s second-largest cinema chain, with operations in 10 countries at 767 locations. Around three-quarters (73%) of its revenues come from the US, where most states have ordered cinemas to close. As a result, the share price crashed steeply last year.If Cineworld’s 2020 results were a film, I suspect that they would be a horror movie. Here’s the headline figure: the embattled cinema chain lost $3bn before tax last year, versus a pre-tax profit of $212m in 2019. CEO Mooky Greidinger said that this was the group’s first yearly loss in its 91-year history. For sure, with cinemas closed around the globe, the business model was in big trouble. Even so, this loss was higher than most analysts predicted, hence the initial steep fall in the Cineworld share price.With cinemas shut down, yearly revenues collapsed by four-fifths (80%) to just $852m. However, with locked-down consumers eager to get back to normal, Cineworld expects 2021/22 to be a bumper period. That said, the group also warned that box-office attendance would be least 5% below pre-Covid-19 levels until 2024. With bad news like this, it’s no wonder that the share price languishes at 30.55p — almost a quarter (24.5%) — below its 52-week high of 124.85p on 19 March (just six days ago).Net debt explodes to $8.3bnIn this horror movie, what frightens me most about Cineworld is its colossal debt burden. At present, the cinema chain’s shareholder equity is valued at around £1.3bn ($1.78bn). Today, the firm announced that it will raise another $213m of liquidity through a convertible bond maturing in 2025. This is on top of existing net debt of $8.3bn. That’s right: the company’s debt is almost 4.7 times its outstanding equity. Were interest rates not so incredibly low, this debt mountain might prove crippling or even fatal. Even so, with such massive obligations hanging over the business, I fear for the Cineworld share price.Would I buy Cineworld at this share price?So would I buy? My answer is an immediate and resounding no. As a veteran value investor, I aim to buy into companies with predictable revenues, earnings, cash flow and dividends. For me, the Cineworld share price is a high-risk bet on rapid growth of the movie/popcorn industry. Of course, I could well be wrong and the Cineworld movie might turn into a feel-good comedy, one leaving shareholders laughing as the shares soar. That really could happen if a much-talked-about leisure spending boom comes about. Whatever happens, just like a Michael Bay blockbuster, there’s going to plenty of action, adventure and plot twists along the way! See all posts by Cliff D’Arcylast_img read more

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