Summary: OVERPRICED
Score: 5/20
MOS: 0%
Share Price: $14
Sticker Price: $2
Is Cinemark stock a good buy?
Cinemark is an American movie theater chain that was founded in 1984 and headquartered in Plano, TX. Its theaters are located in the USA, Argentina, Brazil, Chile, Colombia, Costa Rica, and numerous other South American countries.
Big news was released on 11/17/2020! I’m a movie nerd so I have to share…
This article from qz.com states that Universal Pictures agreed to a deal with Cinemark stating that films will play in theaters for 17 days and then Universal Pictures will immediately release the movies to digital rentals. In the past, theaters would play movies for 75 to 90 days. Believe it or not, 17 days is still profitable for Cenemark as it ensures the most profitable films to remain on the big screen for those critical days, which just so happens to be where most of the tickets are sold anyway. Typically after three weeks, ticket sales per movie fall drastically.
This sounds like a WIN-WIN-WIN for all three parties…
1. Cinemark will generate revenue for a solid 17 days for the most popular releases
2. Universal Pictures will generate revenue in theaters and on-demand
3. The consumers (you and I) no longer have to wait for movies to be released! (About time. I’m getting sick of waiting)
Now let’s take a look at Cinemark from an investment standpoint…
Although the news listed above is good, the problem is theaters won’t be opening completely for awhile. Some theaters are open with limited seating at best and even if a COVID-19 vaccine were to be released, a “massive theater reopening” around the globe is unlikely. This will be a slow process.
I like the good news for the movie industry but it still doesn’t motivate me to buy this stock. When you take a close look within Tykr, you can see where this stock stands.
With a score of 5/20, the financials are weak and this stock is too risky. With a MOS of 0% (Share Price of $14 vs Sticker Price of $2) this stock could lose you and I a lot of money.
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