The Cineworld Group (LSE: CINE) share price has recovered strongly after hitting multi-month lows in early May. The UK leisure chain moved closer to the £1 per share market following an excited reaction to latest financials earlier this week. The current market buzz means that Cineworld could be propelled above penny stock status in the very near future.
Cineworld’s share price is soaring on news that moviegoers are flocking back to its theatres as coronavirus lockdowns are eased. It goes some way to assuage fears that ticket sales would struggle as the pandemic rolls on and people stay glued to streaming services like Amazon Prime and Netflix instead. But is now the time to buy in?
Cineworld’s share price rises again!
In case you missed it, Cineworld said earlier this week that it had enjoyed “a strong opening weekend in the UK” as it reopened its theatres in line with government guidance. In fact it said that its weekend performance “went beyond our expectations as customers were eager to return to the movies and enjoy the full movie experience”. Indeed, Cineworld said that it experienced strong concession sales too.
The roaring success of Peter Rabbit 2: The Runaway helped to drive strong takings last weekend. And chief executive Mooky Greidinger commented that “with the releases next week of Cruella, and A Quiet Place 2, we expect next weekend’s results to be strong”.
Greidinger added that “when combined with improving consumer confidence and the success of the vaccination rollout, we expect a good recovery in attendance over the coming months”.
Outside of the UK, Cineworld said that 97% of the 500-plus cinemas in its core US territory were now open. It added that most of its cinemas in Poland and Israel should be re-opened by the month’s end.
Is now the time to buy?
The Cineworld share price may be on the march again. But I’m afraid I’m still not tempted to buy back into this FTSE 250 share. I sold my holdings in the UK leisure share late last year on fears over its huge debt pile. My concerns surrounding this issue haven’t abated, either. At the same time, the long-term threat posed by streaming companies has increased as studios have changed their movie release models to cater more effectively to audiences at home.
Going to the cinema has long been one of the most popular leisure activities for around a century. And it’s possible that Cineworld might enjoy a strong and sustained recovery following Covid-19 lockdowns, and deliver terrific shareholder returns in the process. Let’s not forget that the global box office sat at fresh all-time highs before the public health emergency, in 2019.
That said, I still think the Cineworld share price carries too much risk right now. Any fresh surge in Covid-19 cases could cause its cinemas to shut en masse once more. It already faces a long road ahead to get its debt mountain off the books. Fresh lockdowns could prove fatal. I’d much rather buy other UK shares for the moment.