Imax has landed in Wall Street’s dog house as investors try to figure out whether its weaker than expected attendance numbers are due to short term problems with Hollywood — or a potentially long term business challenge.

The share price is down nearly 28% since April 1. Today the stock touched its lowest level since early 2013 after Benchmark Co’s Mike Hickey downgraded his recommendation to “hold” from “buy” noting that the current quarter could be the fifth in a row in which Imax will report declining global per-screen attendance.

The analyst adds that he expects the company to announce “a headcount reduction of at least 10% as part of a cost reduction plan.”

Last month CEO Rich Gelfond told investors that he plans to cut costs, but didn’t provide details. An announcement is expected soon — likely before Imax reports its Q2 earnings.

An Imax spokesperson says that “the long-term health of our business is very strong as evidenced by theater signings, installations, [and] theater backlog” along with “strong relationships with theater operators, studios, directors and talent.”

Still, the last several weeks have been rocky. Some investors were disappointed by Imax’s sales for films including The Fate of the Furious and Guardians of the Galaxy Vol. 2: The Imax Experience. All of the major exhibition company stocks have been hit by box office concerns.

In addition, some might have been concerned late last month about Imax’s prospects in China after Moody’s Investors Service cut its rating on the country’s debt for the first time since 1989.  The firm predicted slowing growth in China’s economy.

But Hickey says today that Imax has a problem with theaters that are racing to install popular, plush recliner seats.

That “has shifted share away from Imax,” he says. “Although anecdotal, we have noted demand for recliners within standard auditoriums over an Imax experience, and note that a few competitive [premium large format] solutions offer recliners.”

If that’s right, then it could create a “predicament” for Imax, he says. If it has to follow suit by reducing the number of seats in venues to accommodate recliners, then that “could have a detrimental and lasting negative impact” on per screen attendance.

Imax says that recliners probably are not “a significant factor, particularly since 75% of our theater network is outside of North America where that kind of seating doesn’t exist.”