Stocks in U.S. movie theater circuits AMC and Cinemark staged rallies today after more positive COVID-19 vaccine news as well as a new financial lifeline for Cineworld.
The UK-based Cineworld, parent of Regal Cinemas, said it secured a $450 million credit facility and an overall infusion of $750 million. On the vaccine front, AstraZeneca said late-stage trials of its vaccine, developed with the University of Oxford, have proven “highly effective,” making it the third promising vaccine to emerge in as many weeks. Millions of Americans could start receiving vaccine in early 2021, offering hope for large swaths of the economy.
AMC shares closed at $3.80, up 13%, their highest level since October 12. Cinemark’s closing price of $15.66 was up almost 7% and its best showing since September 4. In further bullish signs for the moviegoing sector, Imax, Marcus Corp., Reading International and National CineMedia all posted gains of between 3% and 7% during the session.
Cineworld shares rocketed 20% on the London Stock Exchange to reach their highest point since September 8.
Broader stocks all moved higher, with the Dow Jones Industrial Average hitting 29,591.27, close to its all-time high.
The fate of theatrical moviegoing has been a looming uncertainty in 2020 as COVID-19 has decimated the business and other sectors predicated on large gatherings of people. Domestic box office is down more than 80% from 2019 levels. Even though no cases of virus transmission have been traced to movie theaters, the exhibition industry has found itself in the same category as bars and nightclubs in the view of most safety officials.
Several hundred movie theaters across the country have had to close their doors again amid a surge in infections. Releases this month and next, including Wonder Woman 1984 and The Croods: A New Age, will bring changes to traditional windows. While some are skeptical, the consensus among Wall Street analysts is that the theater business will start to rebound in 2021.
Despite the short-term stock gains, damage to exhibition shares has been severe. In a year when the S&P 500 has gained 10%, AMC and Cinemark shares have each fallen more than 50%, while Marcus – which also operates hotels – has dropped 62%.
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