The Cineworld share price just touched 70p. What’s next?

Cineworld cinema

It seems that Cineworld (LSE: CINE) is finally breaking out of the rut it has been in over the past two months. As I write this Friday afternoon, the FTSE 250 cinema chain is trading above 70p. This is the first time it has broken to this level since July. 

Signs of a run-up have been visible since the middle of this month. The Cineworld share price fell to around 60p but soon started rising. By yesterday’s close it had gained almost 13%, closing a little below 70p. By the looks of it, it could wrap up the week above that level now. 

James Bond saves the day

I bought the stock a few months ago already. But it I were to buy it now, here is the key question I would ask: Are there are any genuinely positive developments here that can push up the Cineworld share price further?

One reason for the rise is probably the interest cinema goers have shown in the upcoming Bond film. Ticket sales for it went live on 13 September. Shortly afterwards, the Cineworld share price started inching up. Apparently  James Bond: No Time to Die has seen the highest interest levels since the pandemic. And this is just the first of a series of blockbusters slated for release, which have so far been blocked because of the lockdowns. 

One less issue to deal with

Besides this, Cineworld also said earlier this month that it had reached an agreement with dissenting shareholders of the US-based Regal Entertainment Group that it acquired in 2018. Some shareholders were unhappy with the valuation ascribed to the group. They had used a different methodology, which had resulted in a much higher valuation. However, the courts saw that as biased. They did acknowledge that tax cuts in the US, announced in 2018, would have some upward impact on the valuation, though. Cineworld was then asked to pay the relatively small difference in the amount.

On the face of it, this does not sound like the biggest cause of concern. However, at a time when its situation is improving, I think having one less issue to focus on, other than the actual running of the business, may just be a good thing. 

What I’d do about the Cineworld stock

There is no doubt that Cineworld still has much progress to make before it can really come out of the woods. Its acquisition of Regal was already an eyebrow raising one. It took on a huge debt to buy the company. This may well have paid off over time, were it not for the pandemic happening the very next year. This has only increased its indebtedness. And I reckon that will continue to be a nagging problem for it for some time to come. 

However, if the momentum for the movie business continues to build up I think it will become less significant over time. Its share price can be expected to continue rising as more movies hit the screens and the pandemic wanes even more, I think. The Cineworld share price has already risen some 77% in the past year, and I think it can rise far more if the risks remain under control. It is still a buy for me. 

The post The Cineworld share price just touched 70p. What’s next? appeared first on The Motley Fool UK.

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Manika Premsingh owns shares of Cineworld Group. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.