Cineworld share value what happened?

JackRS

My partner has some Cineworld shares which have recently had a significant drop in value. They've issued letters giving some options to buy at a reduced price 4 shares for every 1.


My first question is what happened to the share price? I get that it will go up and down depending on many factors but it seem to roughly half the value a couple of weeks ago inline with Regal deal. The thing I don't understand is the when you look at the share price history for Cineworld back to 2017 it now shows the price maximum in 2017 was over £3.20 in May, however I clearly remember it's 2017 highest was £7.44. How is it possible that the historical values can change so significantly?


http://www.cineworldplc.com/investors/summary-chart.aspx


Forgive my ignorance as I know nothing about shares.


My partner has the option to buy over 7000 shares at a price of £1.57 each (current value £2.34), so if we had some spare cash it might be a good investment but obviously always a risk as I imagine value will drop when everyone sells to make a quick win.


Is it a good idea to get together as much as possible for example at todays value (which they won't be) if we could get £1000 worth of shares it would return nearly £500. Obviously I'm missing something but has anyone got any simple views to share?


Current situation is she has lost a large amount 1800 shares was worth around £10K now is worth £4k just trying to find a way to recover the loss.

Grenage

Current situation is she has lost a large amount 1800 shares was worth around £10K now is worth £4k just trying to find a way to recover the loss.

You can't 'recover the loss', that sort of mentality is a fast way to lose money. With values falling, it's a bad call to buy more unless you have good reason for expecting them to increase.

dawyldthing

Not as many folk go to the cinema and if they do its on an offer generally so it might be why shares have gone down because they aren't making as much money

ChesterDog

...and are the new shares which they are offering ordinary shares or are they a special class which will convert to ordinary shares at a later date (and possibly not at parity)?

JackRS

Thanks guys yes they're ordinary shares

Linton

After some investigation what I have found is this.....

Contrary to what has been suggested so far Cineworld have been very successful. At the end of January Cineworld had a large Rights Issue whereby shareholders were given the rights to buy extra shares very cheaply - all shares on offer were sold. The company needed the money to make a major US purchase. Those people who chose not to take up the offer will receive the equivalent value of the benefit as a cash payment. But of course such people now own a much smaller % of Cineworld. The total of the current share price and the returned money will be less than the share price prior to the Rights Issue.

Update - I now think the cash payment will be much the same as the fall in the share price.

Perhaps someone who knows more about the operation of Rights Issues can provide more detail - my understanding is very limited.

Thrugelmir

Pre rights share price was £5.18p.

4 new shares @ 1.70p = £6.80p

5.18+6.80 = £11.98p divide by new holding i.e. 5 = £2.40p a share

Current share price £2.37p

Basically 3p lower a share post the announcement.


Cineworld are buying a US chain. Jury is out as to whether it's to big a deal for them to chew on.

Revenues are up in the UK and Europe. Cinema depends on blockbusters. Though Cineworld has it's unlimited card offering. Making money from selling add ons such as food, drinks, sweets, icecreams at high prices instead.

noh

This should help explain:-

"How rights issues work and the decisions investors need to make
We apply the methodology to Cineworlds latest fundraise as it asks investors for £1.7bn."

https://www.sharesmagazine.co.uk/article/how-rights-issues-work-and-the-decisions-investors-need-to-make

JackRS

noh wrote: »

This should help explain:-

"How rights issues work and the decisions investors need to make
We apply the methodology to Cineworlds latest fundraise as it asks investors for £1.7bn."

https://www.sharesmagazine.co.uk/article/how-rights-issues-work-and-the-decisions-investors-need-to-make

Thank you so much for that link if only I found that before.


My concern is there was a deadline to sell the rights which was 9 Feb, only got the letter on 8 Feb. So what I'm trying to find out is if you do nothing, don't return any forms what happens? The link said this:


4. DO NOT TAKE UP THE RIGHTS
You could allow your rights to lapse. If the Cineworld share price is below the offer price of 157p on the subscription deadline, the nil-paid rights would expire worthless.
But if they are trading above 157p then you may receive a cash payment per nil-paid share approximately equal to the Cineworld share price less the offer price.

Alexland

I struggle to understand the economics of the cinema business. I see these big new expensive looking buildings being constructed in prime locations and scratch my head wondering how many tickets and overpriced snacks they must need to sell to get anywhere near break even.

It genuinely baffles me. Still if I only invested in the businesses that made sense to me I would have a very concentrated portfolio with low geographic spread so my money inevitably ends up in these companies. I hope it makes sense to someone.

Alex

Thrugelmir

Alexland wrote: »

It genuinely baffles me. Still if I only invested in the businesses that made sense to me I would have a very concentrated portfolio with low geographic spread so my money inevitably ends up in these companies. I hope it makes sense to someone.

Cineworld offer a scheme called unlimited. As the name suggests one can watch as many movies one wants for less than £18 per month. Provides a regular secure cashflow. Simply having greater footfall no doubt generates more additional revenue.

Only invest directly in a business you understand. Otherwise best left to fund manager to analyse.