Cineworld Share Price Continues to Recoil. Is it a Good Buy?

The Cineworld (LON: CINE) share price continued its downward trend on Wednesday as investors focused on the company’s recovery. The CINE stock is trading at 35.42, which was the lowest level since February 8th. It has crashed by more than 71% from its highest level in 2021. 

Cineworld is a leading movie theater company that operates mostly in the United Kingdom and the US, where it owns Regal Cinemas. The company has been under pressure in the past two years because of the pandemic. As a result, the firm has substantially increased its debt and diluted existing investors by raising capital.

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Analysts expect that 2022 will be a better year than 2021 although it will continue making losses. They cite the fact that many places have removed mask and vaccine mandates and the fact that there are some big movie releases on the horizon. 

Some of the top movies expected in the coming months are Thor, Avatar, Jurassic World, and Black Panther. This is notable since these are some of the best-selling blockbuster films of all time. Despite the current sell-off, analysts are optimistic about the Cineworld share price. 

For example, according to Marketbeat, the average estimate of the stock is 83p, which is more than double where it is today. Those at Barclays expect that the shares will rise to over 100p while those at Berenberg see it rising to 85p.

A key challenge for Cineworld is its balance sheet. Due to the Covid-19 pandemic and the lockdowns that ensued, the firm’s total debt soared to more than $4.5 billion, which is currently higher than its total market cap of about 486 million pounds. One option at the table is divesting its American business into a separate entity.

Cineworld share price forecast

The daily chart shows that the CINE share price has been in a strong bearish trend in the past few months. As a result, the stock has moved below the short and long-term moving averages. It remains below the descending trendline that is shown in blue while the MACD is at a neutral level. 

Therefore, in the near term, there is a likelihood that the Cineworld stock price will continue the bearish trend as bears target the lower side of the channel at around 25p. This view will be invalidated if the price moves above the key resistance at 44p.

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