Theater Circuit Stocks Keep Sliding As Movie Summer Recedes Into Distance

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Movie theater stocks continued their slide Friday in the wake of Warner Bros’ decision to postpone the opening of Tenet another two weeks to August 12. Heading into the final hour of trading,…

it could shift later. But the COVID-19 trends have worsened considerably since AMC, Regal, Cinemark and other circuits all announced plans to reopen in the first half of July., which is directed by Christopher Nolan, an outspoken advocate for the theatrical moviegoing experience, was initially set for July 17 and then got pushed to July 31 before the latest move.

Wold said “continued flux” around release schedules for the second half of the year is keeping him “on the sidelines,” with neutral ratings on AMC, Cinemark and Marcus. Liquidity, which had been a short-term crisis as COVID-19 first hit the U.S. in March and early April, will once again be a threat, especially for AMC. The highly leveraged No.

The analyst pointed out the unique challenges faced by theaters. “Although one could argue that exhibitors and regional theme park operators are somewhat in the same boat and face the same issues around reopening timelines, physical distancing protocols, capacity limitations, and increased cleaning requirements,” he wrote, “we have argued that the risks for the exhibitors in this environment go one step further—in that they do not control their own destiny with content.

Wold noted that he has a “buy” rating on the stocks of theme-park companies like Six Flags, Cedar Fair and SeaWorld. Those firms “can essentially open the gates when they are given the green light by state and local officials and own the rides and attractions that draw the guests,” Wold wrote, while exhibitors “can only do the same if there is quality film content for their screens.

New York, LA and San Francisco, the three biggest movie markets, remain the most problematic. Earlier this week, New York Gov. Andrew Cuomo

 

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Cinemark and Marcus are in better shape as didn't overstretch as much as AMC and Cineworld, both trying to outdo the other to be the biggest global exhibitor which put them at risk before shutdown

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