It’s been another rowdy few days for the Cineworld Group (LSE: CINE) share price. The UK leisure share barged through the 90p per share barrier for the first time since early June 2020. And, as I type, it’s within a whisker of moving through the psychologically-critical £1 landmark.
It wouldn’t surprise me if the Cineworld share price moves to significant new levels in the weeks and months ahead. News of the government’s roadmap out of Covid-19 lockdowns has helped the cinema chain sprint higher in recent days. Falling infection rates will feed speculation that Cineworld can fling its doors open again before too long too.
Competitive concerns
I still wouldn’t be tempted to buy this UK share for my Stocks and Shares ISA however. It’s quite possible that people will flock to its cinemas once again in huge numbers from the middle of 2021. But major changes to the way movie studios release their films — changes which benefit the streamers — might challenge the pull of the big screen as viewers decide to watch new movies on their own screens instead.
Problems of increased competition don’t end with Netflix, Disney+ and Amazon either. There are other forms of recreational activity which are growing at a faster pace than the cinema industry too.
Spending on eating out has been growing much faster than that spent on cinema tickets in recent years. The popularity of online betting and video gaming has also been expanding at a faster pace. The time we spend at the gym and taking part in other sports activities have risen more strongly.
Are there better UK recovery shares out there?
Now Cineworld is expected to remain loss-making in 2021. City brokers reckon it will record losses of 26 US cents per share. Though this is better than the loss of 105 cents the chain’s predicted to have chalked up last year. And the UK leisure share is expected to bounce back into the black with earnings per share of 4 cents in 2022.
It’s quite possible Cineworld will reclaim its pre-pandemic glory. Covid-19 has disrupted the company’s bold decision to buy the Regal chain in the US. But the move into the world’s biggest cinema market could still yield terrific returns over the long term.
A trip to the cinema is one of society’s timeless activities. And it’s beyond dispute that the special-effects-driven jaw-droppers delivered by the likes of Marvel, Disney and DC look much better on the big screen than they do on the home television.
But I’m still not convinced Cineworld is an attractive UK recovery share. Aside from those structural threats the business, let’s not forget it also has a gigantic debt pile that it needs to pay down in the years ahead. I think there are many more attractive British stock to buy right now.