Following Cineworld announcing that it was temporarily closing its U.K. locations and the U.S. venues it operates through its Regal Cinemas subsidiary, the news has hit the stock market hard.
Shares of Cineworld plunged more than 40% on Monday, while rival AMC Cinemas saw its share price drop roughly 11% as markets opened. Other exhibitors also suffered from an industry-wide selloff including Cinemark falling nearly 13%, Marcus down roughly 8%, National Cinemedia falling over 9%, and IMAX dropping more than 3%.
Several of these companies are heavily leveraged, so investors are concerned about how they will be able to endure months without steady box office returns while servicing their debts. COVID-19 cases in the U.S. have spiked, and the United Kingdom is seeing a resurgence as well.
Cineworld are temporarily closing all 536 of their Regal Cinemas locations in the United States starting on Thursday, along with 127 Cineworld and Picturehouse cinemas in the United Kingdom.
Source: CNBC