Cineworld shares dip on reopening news: what I’d do now

first_img 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. The Cineworld Group (LSE: CINE) share price fell when markets opened on Tuesday morning, despite the company revealing plans to reopen US cinemas in April. UK cinemas are set to follow in May.Cineworld also revealed the outline of a new exclusivity deal with Warner Brothers studios. Starting in 2022, the cinema chain will be able to show films in US and UK theatres for a guaranteed period before they’re available through video-on-demand services.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…Today’s news seems positive to me. But Cineworld’s share price has already risen by 75% this year and by 165% over the last 12 months. Is it too late for me to buy this reopening stock — or is there more good news to come?What I likeLet’s start with the positive news from today’s announcement. Cineworld’s Regal business in the US generates 75% of the group’s revenue but has been closed since October. Selected theatres will now reopen with Godzilla vs Kong on 2 April, followed by a wider opening for Mortal Kombat on 16 April.According to the company, capacity restrictions will allow occupancy of 50% or more in most US states. CEO Mooky Greidinger says that this means “we will be able to operate profitably in our biggest markets.” I reckon that could be positive for Cineworld shares.Warner Brothers backs cinemasThe new deal with Warner Brothers also looks good to me. Starting in 2022, Cineworld will get a 45-day exclusive period to show new films in US cinemas before they’re released to Warner Brothers’ premium video-on-demand service. In the UK, Cineworld will get a 31-day exclusivity period.This deal is particularly significant, in my view, because it reverses Warner Brothers’ decision to release its new films directly to premium video-on-demand in 2021. If the Hollywood giant had chosen to continue this policy into 2022, I reckon it could have made life tough for cinema chains.Are Cineworld shares still cheap?Cineworld has a good story. The Greidinger brothers who run the business are said to be cinema fanatics. They’ve built the group into the world’s second-largest cinema chain.I like a good story as much as anyone. But I don’t invest my hard-earned cash into stories unless I’m happy that the numbers stack up nicely too.Cineworld shares were probably cheap at 40p a year ago. But at 110p today? I’m not so sure. This share price values the stock at 14 times 2022 forecast earnings, despite the group’s $8bn net debt.That seems high enough to me. I’m also aware that today’s press release didn’t include any details of the financial deal Cineworld has struck with Warner Brothers. From what I can see, the movie studio had a stronger negotiating position than the cinema chain.Cineworld raised $750m of extra funding in November so I don’t expect the company to run out of money. But I’m uncomfortable with the group’s high debt levels. When business returns to normal, I think there’s a risk that shareholders could be asked for extra cash to help cut debt.I reckon this reopening stock is already trading at fair price. I won’t be buying Cineworld shares for my portfolio at this time. “This Stock Could Be Like Buying Amazon in 1997” 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. Cineworld shares dip on reopening news: what I’d do now 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. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Roland Head 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.center_img Roland Head | Tuesday, 23rd March, 2021 | More on: CINE Simply click below to discover how you can take advantage of this. Our 6 ‘Best Buys Now’ Shares Enter Your Email Address Image source: DCM See all posts by Roland Headlast_img read more