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  • FIRST POST
    • JackRS
    • By JackRS 14th Feb 18, 4:35 PM
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    JackRS
    Cineworld share value what happened?
    • #1
    • 14th Feb 18, 4:35 PM
    Cineworld share value what happened? 14th Feb 18 at 4:35 PM
    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.
    Regards

    JackRS
Page 1
    • Grenage
    • By Grenage 14th Feb 18, 5:17 PM
    • 1,434 Posts
    • 1,337 Thanks
    Grenage
    • #2
    • 14th Feb 18, 5:17 PM
    • #2
    • 14th Feb 18, 5:17 PM
    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
    • By dawyldthing 14th Feb 18, 5:22 PM
    • 2,896 Posts
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    dawyldthing
    • #3
    • 14th Feb 18, 5:22 PM
    • #3
    • 14th Feb 18, 5:22 PM
    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
    My targets to end 2018:
    1) To get down to 11 st 7lbs then treat to a safari. At start 17 stone 7 lbs *61lbs lost* *30lbs to go*
    1st started SW16st13lbs tues11/7/17 - 38 weeks -53lbs
    2nd -> target 11 st 7lbs
    2) to find new challenges
    • ChesterDog
    • By ChesterDog 14th Feb 18, 6:04 PM
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    ChesterDog
    • #4
    • 14th Feb 18, 6:04 PM
    • #4
    • 14th Feb 18, 6:04 PM
    ...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)?
    I am one of the Dogs of the Index.
    • JackRS
    • By JackRS 14th Feb 18, 6:24 PM
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    JackRS
    • #5
    • 14th Feb 18, 6:24 PM
    • #5
    • 14th Feb 18, 6:24 PM
    Thanks guys yes they're ordinary shares
    Regards

    JackRS
    • Linton
    • By Linton 14th Feb 18, 6:30 PM
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    Linton
    • #6
    • 14th Feb 18, 6:30 PM
    • #6
    • 14th Feb 18, 6:30 PM
    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.
    Last edited by Linton; 14-02-2018 at 6:41 PM.
    • Thrugelmir
    • By Thrugelmir 14th Feb 18, 6:46 PM
    • 58,475 Posts
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    Thrugelmir
    • #7
    • 14th Feb 18, 6:46 PM
    • #7
    • 14th Feb 18, 6:46 PM
    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.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • noh
    • By noh 14th Feb 18, 7:00 PM
    • 5,231 Posts
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    noh
    • #8
    • 14th Feb 18, 7:00 PM
    • #8
    • 14th Feb 18, 7:00 PM
    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
    Last edited by noh; 14-02-2018 at 7:05 PM.
    • JackRS
    • By JackRS 14th Feb 18, 7:57 PM
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    JackRS
    • #9
    • 14th Feb 18, 7:57 PM
    • #9
    • 14th Feb 18, 7:57 PM
    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
    Originally posted by noh


    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.
    Regards

    JackRS
    • Alexland
    • By Alexland 14th Feb 18, 8:33 PM
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    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
    • By Thrugelmir 14th Feb 18, 9:16 PM
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    Thrugelmir
    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.
    Originally posted by Alexland
    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.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • noh
    • By noh 14th Feb 18, 9:21 PM
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    • 3,531 Thanks
    noh
    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.
    Originally posted by JackRS
    You should receive a cash payment for your lapsed rights.
    • greendoor665
    • By greendoor665 14th Feb 18, 9:21 PM
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    • 125 Thanks
    greendoor665
    As an investor, the only sensible strategies are to take up your rights, sell them on, or a combination of both. Doing nothing means you lose money.
    • Linton
    • By Linton 14th Feb 18, 9:22 PM
    • 9,384 Posts
    • 9,519 Thanks
    Linton
    As an investor, the only sensible strategies are to take up your rights, sell them on, or a combination of both. Doing nothing means you lose money.
    Originally posted by greendoor665
    If you dont take up the offer the Rights are sold anyway. The OP should be receiving a cheque at some stage.
    • Alexland
    • By Alexland 14th Feb 18, 9:26 PM
    • 2,388 Posts
    • 1,789 Thanks
    Alexland
    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.
    Originally posted by Thrugelmir
    Even with a subscription model and assuming they sell enough snacks I still wonder how they make enough margin to cover the rent, rates and wages let alone the HQ costs.

    I am overly pessimistic on the potential downside risk of most individual businesses which is why I like funds.
    • Linton
    • By Linton 14th Feb 18, 9:35 PM
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    Linton
    One extra bit ......

    The OP reported that history had appeared to have changed with much higher share values remembered from last year than are now shown in charts. The answer is yes, history is changed in these circumstances so as to ensure the share prices before and after can be sensibly compared.
    • Thrugelmir
    • By Thrugelmir 14th Feb 18, 9:44 PM
    • 58,475 Posts
    • 51,848 Thanks
    Thrugelmir
    Even with a subscription model and assuming they sell enough snacks I still wonder how they make enough margin to cover the rent, rates and wages let alone the HQ costs.

    I am overly pessimistic on the potential downside risk of most individual businesses which is why I like funds.
    Originally posted by Alexland
    My earlier comment was simplistic. Though Cineworld appear to have a business model that works. No business is immune to a downturn. The cinema industry is renowned for being dependent on blockbusters such as Star Wars to make serious money.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • apt
    • By apt 14th Feb 18, 10:16 PM
    • 3,067 Posts
    • 1,728 Thanks
    apt
    There's a bit of a price war going on. My local multiplex is 4.99 any film any time.
    • aroominyork
    • By aroominyork 14th Feb 18, 10:52 PM
    • 450 Posts
    • 133 Thanks
    aroominyork
    I am overly pessimistic on the potential downside risk of most individual businesses which is why I like funds.
    Originally posted by Alexland
    ... which are made up of individual businesses.
    • Alexland
    • By Alexland 14th Feb 18, 10:53 PM
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    • 1,789 Thanks
    Alexland
    ... which are made up of individual businesses.
    Originally posted by aroominyork
    Of course but at least it spreads the risks so I don't end up with a sinking without hope disaster share on my hands.
    Last edited by Alexland; 14-02-2018 at 10:57 PM.
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