Last month, Cineworld announced they were considering filing bankruptcy, a move that saw its share prices dropping by more than 60 per cent in a single trading session. By the end of the month, the share price had dropped by 85 per cent.
InvestingCube's S&R Levels
Not in Sell Zone
However, for the past two weeks, the share price has started to come to life again. Cineworld’s share price has gone from trading at a 1.80p price level on August 19th to the current price of 5.48p price level, a price surge of more than 200 per cent.
The recent growth of Cineworld’s share price comes despite reports of one of its largest shareholders dumping shares of the company. Documents recently filed with the London Stock Exchange showed Jangho Group, a company that is associated with Chinese billionaire Zai Wang Liu, reducing its shareholding of Cineworld from 11.6 per cent to 1.6 per cent in the past week.
Cineworld Share Price Analysis
Despite the recent recovery and share price surge of over 200 per cent in the past two weeks, Cineworld is still in debt of $4.8 billion, and with its market capitalization dropping to $54 million, it is likely that the company will not be able to service these debts in the short-term.
However, in the meantime, I expect the current aggressive push to the upside to continue. There is a high likelihood that we may see Cineworld share price trading above the 10p price level in the next few trading session. Part of the reason for my positive outlook is that despite the company continuing to struggle in the markets, moviegoers are still interested in watching movies on the big screen.
Therefore, the demand for its services has remained high despite its recent financial struggles. What is currently lacking is a blockbuster movie release that can see Cineworld consolidate its customer base and cut its losses. My bullish analysis will be invalidated by Cineworld share price trading below the 2p price level.