Investors are worried about the fate of movie theaters after Cineworld announced that it was temporarily closing its U.K. locations and the U.S. venues it operates through its Regal Cinemas subsidiary. The announcement sent shockwaves through the exhibition industry, which has struggled to remain viable after coronavirus closed down venues around the world for months.
Shares of Cineworld plunged more than 40% on Monday, and the theater chain wasn’t alone in seeing its stock tumble. AMC Cinemas’ saw its share price drop roughly 11% as markets opened in the U.S. while other exhibitors also suffered from an industry-wide selloff. Cinemark plunged nearly 13%, Marcus Corporation was down roughly 8%, National Cinemedia dropped more than 9%, and Imax Corporation saw its share slide more than 3%. Several of these companies, such as Cineworld and AMC, are heavily leveraged, which has already made investors concerned about how they will be able to endure months without steady box office returns while servicing their debts.
Movie theaters had hoped to kick off a major reopening at the end of summer with the release of Christopher Nolan’s “Tenet.” Things didn’t work out exactly as planned. Major markets in the U.S., such as Los Angeles and New York City, have yet to allow cinemas to welcome back customers, depriving studios and theater chains of millions in revenue. At the same time, domestic results for “Tenet” were weaker than expected, signaling that audiences are skittish about returning to theaters during a pandemic.
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Many major films that were intended to be released this fall and holiday season have delayed their debuts until 2021. On Friday, the James Bond sequel, “No Time to Die,” postponed its release until April joining the likes of “West Side Story,” “Black Widow,” and “The King’s Man,” which have moved their premieres by months.