Given promising news about a potential coronavirus vaccine, movie theaters see hope for a sector that has been decimated by the pandemic.
News of a potential coronavirus vaccine sent shares of movie theater chains soaring on Monday. For the first time in a long time, it seems, cinema owners and investors see hope for a sector that has been decimated by the public health crisis. “We have not heard good news for awhile, and this is unqualified good news,” says Rich Gelfond, CEO of Imax Entertainment. “This is potentially a game changer. It gives us greater clarity about when and how this pandemic may end.” Buoyed by the announcement, AMC Theatres’ stock rose 51.4%, Cineworld shares jumped 40.25%, Cinemark stock climbed 45.17%, and Imax shares got an 18.61% boost. To be fair, the share prices were a fraction of what they were pre-pandemic. For instance, AMC closed the day at $3.77 a share, less than half of what shares were trading in February. Despite Wall Street’s burst of optimism, the movie business still faces fierce headwinds. Box office revenues have plummeted since COVID-19 first started spreading in the United States last winter. While cinemas in 48 states have reopened, many are still digging out from a very deep hole after being closed for much of the spring and summer and theaters in Los Angeles and in New York City remain shut. Some are teetering on the verge of insolvency, with the National Association of Theatre Owners (NATO) predicting that as many as 70% of small to mid-sized theaters are facing bankruptcy by early next year without some kind of federal assistance. That kind of lifeline may be hard to secure given that stimulus talks have largely broken down and Congress is now entering a lame duck session when legislation tends to grind to a halt. “If the vaccine news is on track, that’s very exciting and is a very bright light at the end of the tunnel, but it’s a long tunnel and many of our companies are barely breathing air right now in terms of their liquidity,” says John Fithian, CEO of NATO. While Imax’s Gelfond speculated that a vaccine could be widely available by April, there are reasons to doubt that optimistic timetable.
