MARKET REPORT: Cineworld shares swing higher as success of new Spider-Man film helps boost its revenues back towards pre-pandemic levels
Cineworld shares swung higher as the success of the new Spider-Man film helped boost its revenues back towards pre-pandemic levels.
The FTSE250 group jumped 4 per cent, or 1.56p, to 40.35p as it said that revenues in December last year were 88 per cent of the same figure in 2019, up from 56 per cent in November.
Cineworld noted that the ‘particularly strong’ performance in December had been bolstered by the release of Marvel blockbuster Spider-Man: No Way Home, which became the first film since the start of the pandemic to gross more than £1.1billion at the box office.
Bouncing back: Cineworld noted that the ‘particularly strong’ performance in December had been bolstered by the release of Marvel blockbuster Spider-Man
Revenues for the company’s US cinemas were the strongest during the month, rising to 91 per cent of pre-pandemic levels. Its UK and Irish screens were at 89 per cent of the figure generated in December 2019.
As a result of the recovery and cost-cutting measures, Cineworld’s cash flow turned positive in the fourth quarter of 2021.
‘This demonstrates that fans are continuing to choose the unrivalled theatrical experience’, said the group’s boss Mooky Greidinger. Analysts at broker Peel Hunt said the update was ‘encouraging’, as was a strong slate of releases in 2022 which include The Batman, Top Gun: Maverick, Jurassic Park: Dominion and Mission: Impossible 7.
However, the broker warned that the share price would be influenced by its ongoing £723m legal battle with Canadian rival Cineplex following an aborted merger between the two in 2020.
Cineworld is appealing a judgement in favour of Cineplex that was handed down by a Canadian court in December.
‘We believe that Cineworld’s share price trajectory will be driven by expectations regarding the court case, either until it reaches a conclusion, or negotiates a settlement’, Peel Hunt said.
The FTSE 100 shed 0.3 per cent, or 20.9 points, to 7542.95 while the FTSE 250 dropped 0.9 per cent, or 215.13 points, to 22743.35.
Uncertainty about the threat posed by inflation continued to hold back market sentiment, as well as uncertainty about interest rate rises from various central banks. Oil companies were among the strongest risers in the blue-chip index as crude prices climbed back above $85 a barrel.
Shell gained 0.8 per cent, or 13.8p, to 1822.6p while BP added 1.3 per cent, or 4.8p, to 388.7p, its highest level since March 2020.
Several banking stocks also climbed amid hopes of higher interest rates boosting their earnings. Standard Chartered was up 2.3 per cent, or 11.8p, at 523.2p while Lloyds added 1.9 per cent or 1p to 54.97p and HSBC rose 0.7 per cent, or 3.6p, to 516.6p.
Also among the blue chips, B&M fell 5.3 per cent, or 31.8p, to 564.8p after the billionaire brothers who built up the discount retailer into a nationwide chain sold more than a quarter of their shares in the company. An investment company linked to Simon and Bobby Arora said that it had made £234m selling about 4 per cent of B&M’s shares.
The Arora brothers bought what was then a struggling local supermarket chain in 2004 and transformed it. It is the second time the brothers have sold a major stake in the business since it listed. In 2017 they exchanged a quarter of their shares in B&M in a payday that saw them pocket £215m.
It was a horror show for smallcap health tech firm Sensyne, which saw its share price crash 71.5 per cent, or 54p, to 21.5p after it warned it could run out of cash within weeks. The firm, founded by former government minister Lord Drayson, is trying to secure a £6.4m bailout loan from several investors. However, if the deal falls through it was ‘unlikely’ that Sensyne would continue trading beyond early February.