Cineworld Share Price Popped – But Gains Could be Limited

The Cineworld (CINE) share price was among the best performers in the FTSE 250 on Thursday. The stock spiked by more than 6%, pushing it to the highest level since Monday this week. This happened as other Covid-exposed stocks retreated.

Why Cineworld shares jumped. 

The Cineworld share price rocketed higher after the company announced plans to list in the United States. The company could dual-list in New York or offer a part of its Regal Cinema business to American investors.

The company said that it hoped that the listing will give it access to the vast amount of liquidity in the United States. The CEO also said that such a listing will help it join other cinema companies that are traded in the US.

The Cineworld share price has struggled even as AMC has become a darling of retail investors. The company’s stock price has already jumped by more than 220% in the past three months. It has risen by more than 600% in the past 12 months. This volatility has in turn pushed the company to raise funds to boost its balance sheet. 

Still, not all cinema companies have followed AMC in becoming a meme stock. Indeed, Cinemark shares have declined by more than 30% in the past 3 months.

Cinemark, Cineworld, AMC stock prices
Cinemark, Cineworld, AMC stock prices

Meanwhile, the company announced relatively strong results today. It admitted 14 million customers in the first half of the year and made more than $293 million in revenue. It also secured more than $400 million in funding and received about $203 million from the government.

Still, Cineworld faces an uncertain future as the number of Covid cases keep rising in most countries. This trend has even pushed more people to cancel their trips, according to Southwest Airlines. Worse, the firm still carries more than $4.6 billion in debt.

Cineworld share price forecast

The four-hour chart shows that the CINE share price has been under intense pressure lately. It has dropped by more than 48% from the highest point in March this year. Still, even with today’s strong comeback, the stock has formed a bearish flag pattern that is shown in black. In technical analysis, a flag is usually a sign of continuation. 

Therefore, I suspect that the stock will keep falling as bears price in a slower recovery of the firm. If this happens, the shares will likely drop below 50p. This is in line with what my colleague wrote earlier. On the flip side, a move above 70p will invalidate this view.

Cineworld share price