Cineworld share price has moved sideways in the past few days as investors weigh the next developments in its bankruptcy proceedings. The shares were trading at 6p on Monday, which was much lower than this month’s high of 9p. This price is still about 230% above the lowest level this year.
Is CINE a good buy?
Cineworld share price has had a strong performance this month after the company made progress in its bankruptcy proceedings. The firm reached an agreement with its landlords that also gave it access to $1 billion to pay its debt. It agreed to pay $20 million in rent that has accrued since September 20.
As part of the agreement, Cineworld also agreed to explore selling its business to external parties. With a market cap of just 80 million pounds, Cineworld will likely find private equity buyers. Potential buyers will hope to reinvigorate the company’s growth as it faces significant challenges. They could also generate value by separating Cineworld’s UK assets with Regal Cinemas.
Meanwhile, the movie theatre industry is recovering at a slower pace than other sectors. Most blockbuster movies published this year have lagged the performance of those released before the pandemic. The best-performing movie this year is Spider-Man followed by Top Gun Maverick. In a recent report, Gower Street Analytics slashed its projections for 2022 revenues across the US and international markets, excluding China, to $21.8 billion. Cineworld expects that its recovery will take about two years.
Some movies that will boost Cineworld are Black Panther, Avatar, and Black Adam. In 2022, movies set to be released are 84, up from 73 this year. As such, in better market conditions, such a situation would be positive for the Cineworld share price.
Cineworld share price forecast
The two-hour chart shows that the CINE stock price has been in a consolidation phase after the shares popped earlier this month. It remains slightly above all moving averages while the Relative Strength Index (RSI) has moved slightly below the overbought level. It seems like it is forming a bullish pennant pattern.
Therefore, there is a likelihood that the Cineworld share price will have a bullish breakout as buyers target the next key resistance level at 7p. A drop below the key support at 5p will invalidate the bullish view.