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Alina Haynes
2023-09-25 17:25:37
The film industry, which has been hit hard by the pandemic, is recovering step by step as the re-unblockings around the world. Therefore, companies that produce, distribute, and broadcast movies deserve the attention of investors. Let's learn about the 9 best cinema stocks right now.
Over the past few years, the movie industry has plummeted as a result of the pandemic. At the peak of the epidemic in 2021, the COVID-19 pandemic nearly destroyed the entire film industry. In 2022, the film industry was gradually recovering with the re-unblocking around the world.
Movie theaters provide a more immersive big-screen experience. Although they have been impacted by new media, they are still strong. Movie stocks that are gradually recovering may be a good choice for investors. Although there are different opinions on the best movie theater stock, investors should choose their investment goals according to their situation and personality. For example, day traders chase stock price fluctuations, while long-term investors may value industry prospects and company fundamentals.
With that in mind, we present nine different types of movie theater stocks that will suit every kind of investor.
The coronavirus pandemic has led to a series of closures of the world's major movie theater chains and limited theater capacity to operate for a long time. These pressures are largely lifted as countries unblock, with strong year-on-year growth in 2022 box office takings. Nevertheless, the cinema industry still faces significant challenges for a long time.
The growth of streaming services is reducing the value proposition offered by theaters. Some major studios, including Disney, have opted to distribute major films through direct-to-consumer streaming channels rather than using traditional movie theaters. Other entertainment options, including video games and social media, have also hit the movie theater industry, as consumers can watch many different movies and videos simultaneously on other platforms.
But traditional theaters aren't throwing in the towel, and chains offer new experiences, including higher-quality seating and dining experiences. Although they can separate the cinema experience from watching at home, they are unlikely to replace the need for streaming distribution services.
Ticket sales at traditional cinemas are likely to continue to rise this year as the world unlocks and the film industry recovers. Despite challenges for the broader market, some movie theater stocks could do well in 2023. Still, investors should treat the theatre sector with caution.
Our first stock recommendation is IMAX Corp., which trades on the stock exchange under the IMAX ticker.
IMAX Corp. is a Canadian company founded in 1967 that specializes in designing and manufacturing IMAX cameras and projection systems. IMAX went public in 1994 and began trading at an IPO price of around $5 a share.
IMAX's stock hit an all-time high of $40 a share in June 2015. IMAX shares traded back down to $16 a share just before the 2019 pandemic. IMAX was hit during the pandemic, and its share price fell, but it has now recovered to pre-pandemic prices. Between 2020 and 2021, IMAX's revenue grew 86%, from $137 million to $254 million.
IMAX stock is an attractive movie stock known for its highly specialized quality screens that can provide audiences with a one-of-a-kind experience. IMAX uses an asset-light business model, licensing its technology to exhibitors, including AMC, without having to build or maintain theatres themselves. In addition, IMAX's premium screens allow exhibitors to charge moviegoers more for the immersive experience of a larger screen. IMAX is also in a solid financial position, taking into account the impact of the pandemic, with more cash than debt on its balance sheet. Overall, IMAX shares are a good choice for investors looking for film stocks with solid balance sheets as movie theaters adapt and begin to compete with streaming services.
AMC Entertainment is the world's largest movie theater chain. AMC Entertainment, founded in 1920, began trading on major stock exchanges in 2013 with an IPO price of around $20 a share.
AMC lost 90% of its value from 2016 to 2020. But then, suddenly, in 2021, it soared more than 2,600%. AMC stock hit an all-time high of around $70 a share in June 2021, thanks to the meme stock surge. For the first quarter of 2022, AMC reported revenue of $785.7 million and a net loss of $337.4 million. AMC shares are currently trading at about $18 as of April 2022.
Because of the short squeeze, the stock became a favorite of retail investors on Reddit and other social media hubs. While the stock has retreated significantly from meme mania, AMC's business challenges and valuation concerns remain. It's worth noting that AMC shares have also returned handily over the past few years, despite being buffeted by pandemics and competition from streaming services. AMC is likely to remain volatile for years, but investors are still expected to make decent gains on the stock.
The Walt Disney Company is not a traditional movie theater but an entertainment company with a long history. It was founded in 1923 and is headquartered at Walt Disney Studios in Burbank, California. Disney has been making movies since the 1920s, but since then, its business has expanded far beyond film. In addition to Walt Disney Studios, the company owns Marvel Studios, Pixar, 20th Century, Lucasfilm, and several other notable film studios.
With its wealth of famous characters and big franchises, including the Marvel Cinematic Universe and Star Wars, the company's stability is unmatched. The company released seven films in 2019 that grossed more than $1 billion at the global box office, and its films have collectively grossed more than $13 billion. Before the pandemic, Disney dominated the box office.
The diversified nature of Disney's business also makes the company a less risky investment than pure movie theater stocks. If the theater business falters, the company's popular Disney+ streaming service should still allow it to benefit from continued growth in streaming demand, and Disney's parks and resorts and media networks generally do well.
Disney, which went public in 1957, trades at about $13 per share based on DIS. The stock hit an all-time high in January 2021, trading at around $184 per share.
Netflix was founded in 1997 and went public in 2002 under the ticker symbol NFLX. The stock's IPO price was about $15 a share, and hit an all-time high of around $700 per share in October 2021.
Unlike other companies, Netflix shares have been supported during the pandemic, largely by the digital streaming element that Netflix introduced starting in 2007, which allows users to use video game consoles to watch content on their computers or televisions. Over the past decade, there has been a gradual shift from going to the cinema to watching at home, especially during the pandemic, when many people are forced to stay at home, so many choose to buy Netflix's streaming service for entertainment.
At the same time, as streaming evolves and goes mainstream, Netflix has enormous investment potential, and analysts believe the stock has much upside and will continue to perform strongly in the next few years.
Cinemark Holdings Inc. is a holding company founded in 1984 and headquartered in Plano, Texas. The company opened its first cinema in 1984 and has since owned and operated cinemas through its subsidiaries in the United States and Latin America. As of March 2021, the company had 523 theaters and 5,872 screens in the United States and Latin America.
Cinemark Holdings went public in 2007 and began trading at an IPO price of around $19 a share. The stock rose before the 2019 pandemic began and hit an all-time high in March 2015, trading at about $45 a share.
But Cinemark Holdings, like many other companies, took a devastating hit during the pandemic, with its stock hitting a low of $10 a share in March 2020. But as countries re-unlockup, the company's earnings more than doubled year over year in 2022, the stock is up 120%, and while it's still not back to pre-pandemic levels, analysts still see huge potential in the stock.
Comcast is one of the world's largest media conglomerates, with a diverse portfolio spanning the entire entertainment industry, including Hollywood's most admired Universal Pictures. In addition to producing a large number of iconic movies, Comcast operates Universal Studios theme parks in Los Angeles, Singapore, Orlando, and Osaka.
In addition, Comcast provides Internet and cable TV services through its Xfinity subscription, and it has an extensive library of TV channels, such as NBC, Bravo, Telemundo, Syfy, E! Etc.
In 2020, along with the growth of streaming services, Comcast launched its own Peacock streaming service. Although yet to be at the level of Hulu or Netflix, it has been growing steadily.
Thanks to its diversified portfolio and numerous sources of interest, Comcast's stock has been rising and delivering strong returns to its shareholders even though many companies have struggled with the pandemic and faced bankruptcy over the past few years.
Based in North America, Amazon.com, Inc. offers consumer retail and subscription services through its online platform and offline physical stores. Amazon is listed on Nasdaq under the ticker symbol AMZN. Over the past year, Amazon's revenue was about $514 billion. Analysts believe the stock will continue to be strong in the next few years, and there is plenty of room for upside.
ViacomCBS was formed by the 2019 merger of Viacom and CBS. ViacomCBS owns television stations such as CBS, Comedy Central, Showtime, and Nickelodeon. Most of its assets are in television, but it also owns the venerable Paramount film studio. The Paramount Film Studios is located in Los Angeles and was founded in 1912.
ViacomCBS, which owns the Paramount+ and Pluto TV streaming services, is flat in 2021 thanks to its streaming service. With the rise of streaming services, analysts see a significant upside for ViacomCBS if it can continue to grow in the streaming space.
Cinedigm Corp was founded in 2000 as an entertainment provider. It is listed on NASDAQ under the ticker symbol CIDM.
Cinedigm Corp integrates 18 channels and aggregates a large amount of original content to be broadcast on its network channels. It also includes more than 52,000 TV shows and movies from outside sources, and Cinedigm continues to add new media services.
Cinedigm is currently a penny stock, but its stock is up 380% in 2022 alone. Although investing in penny stocks may suffer from price volatility, analysts believe the stock still has a significant upside.
Some movie theater giants are already using cryptocurrencies. According to SAWA, the global cinema advertising association, about half of the people who go to the cinema to spend money are in line with those who participate in cryptocurrency transactions, so supporting cryptocurrencies could attract more consumers, especially during a cryptocurrency bull market. Starting in September 2021, AMC will accept Bitcoin, Bitcoin Cash, Ether, and Litecoin for ticket purchases. Recently, the mobile theater chain added meme cryptocurrencies Dogecoin and Shiba Inu as payment options through its mobile app.
The meme stock boom has buoyed cinema stocks. Retail investors use social media apps to make organized trades, buying stocks heavily shorted by institutional investors. In early 2021, meme-driven buyers flocked to movie theater chain AMC, sending its stock up more than 3,700% in six months. As of September 2022, the giants of the movie theater industry, AMC, Cinemark, and Imax, had 17%, 23.6%, and 10% of their shares held short, respectively, making them possible targets for meme traders looking for the next short squeeze game.
Movie theater stocks face increased competition from the growth of streaming services. Deep-pocketed tech giants like Apple and Amazon and entertainment giant Walt Disney Co offer on-demand streaming options. With the streaming service, consumers can get unlimited streaming content for as little as $10 to $15 monthly, much cheaper than tickets sold at traditional theaters. As streaming services grow in popularity, filmmakers could switch to the streaming model if they bring in as much money in the future.
The global pandemic has changed how people live and encouraged the rise of streaming services, but there is still something to be said about the traditional cinema industry. The cinema industry is recovering as people around the world are unbundling and getting out of their homes. Movies and other visual media have always been an essential part of the entertainment in our lives, so the film industry is not going away anytime soon. In addition to movie theaters, companies that produce and distribute movies are also good additions to your portfolio.
As mentioned above, this is my take on cinema stocks. First, streaming media has advantages because they offer a cheaper and more convenient way to watch movies. But browsing online photos is also more affordable and convenient than visiting tourist sites in person, which doesn't stop people from loving travel. Traditional movie theaters offer a uniquely immersive experience that can't be replicated while watching a movie at home. The film is one of the most complex art forms, and it combines sight, sound, and effects to convey information to the audience. These art forms are better experienced on the big screen, and many audiences still prefer to see them in the cinema.
I hope you have learned some helpful information about cinema stocks from this article, but please also make your investment decision based on your own due diligence and risk tolerance. Also, remember that any investment has risks. Before investing in cinema stocks, please carefully understand the business you want to invest in.
1. Register an account: You can apply online through the webpage or mobile app, which is convenient and fast.
2. Find the product.
3. Start trading (open long or short positions).
