Will the 45p Cineworld share price ever return to £2?

first_img 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. “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images See all posts by Rupert Hargreaves Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Will the 45p Cineworld share price ever return to £2?center_img The Cineworld (LSE: CINE) share price looks cheap compared to its trading history after recent declines. And with that being the case, the stock looks interesting to me as I’m a value investor at heart. However, I’m worried about the company’s prospects. It seems to me as if the odds are stacked against the business and its plans for recovery in the near term.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 share price headwindsThe way I see it, three major headwinds are holding back the stock at present. The biggest of this is the fact that most of the firm’s locations are now closed. This is preventing the group from generating revenue. Second, debt. Cineworld has a lot of it. It will be hard for it to make a dent in its borrowings at reduced levels of capacity, and impossible if the screens are not allowed to open. Third, customers. Any business needs customers to be profitable. Cineworld faces a huge problem here. Aside from the fact that the group’s cinemas are closed, the firm is operating in a rapidly shifting media environment. Streaming is taking over. Consumers no longer need to visit the cinema to see the latest film. Streaming services can provide this service at a fraction of the cost. To some extent, the Cineworld share price is tied to new film releases. A good release can make or break the firm’s year. In recent years, it has benefited from a slate of blockbuster films, but there’s no guarantee this will continue. Indeed, several films have gone straight to streaming this year.I think this shows how little power the company really has, and that’s a concern. In some respects, it suggests the firm is not in control of its own future. Uncertain outlookWhen evaluating stocks for my portfolio, I like to buy companies with strong competitive advantages and robust balance sheets. Cineworld has neither of these. As such, I’m wary about buying the shares. Yes, the stock looks cheap compared to its trading history. However, from a fundamental perspective, it isn’t easy to see where the company goes from here. Even if a coronavirus vaccine is rolled out in the next few months, there is no guarantee consumers will return to the group’s screens quickly. What’s more, there’s no guarantee production studios will supply the business with films to show. This makes it very difficult for me to figure out if the company has any future, and if it is worth buying at current levels. Therefore, I may avoid the business for the time being in favour of other opportunities. I think it may be more sensible to wait and see how the next few months pan out before taking a position. Even though a vaccine rollout is on the horizon, this does not guarantee that the Cineworld share price will recover lost ground in the near term.  Rupert Hargreaves | Sunday, 22nd November, 2020 | More on: CINE Enter Your Email Address Our 6 ‘Best Buys Now’ Shares 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. Rupert Hargreaves 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.last_img read more