Please ensure Javascript is enabled for purposes of website accessibility

Why Movie Theater Stocks Are Down, but 1 TV Stock Is Up Today

By Rich Smith - Mar 17, 2020 at 12:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

AMC and Cinemark shares tumble on cinema closures, but Central European Media is thriving.

What happened

If it's Tuesday, and the coronavirus is in the news, stocks must be down. But for a change this morning, not all stocks are down.

On the one hand, at 10:55 a.m. EDT on Tuesday, we find movie chain operator Cinemark Holdings (CNK 4.45%) and its rival AMC Entertainment Holdings (AMC 14.34%) down 22% and 21.5%, respectively. But on the other hand, Central European Media Enterprises (CETV) is up 26.7%.

Red arrow swoops up and blue arrow swoops down

Image source: Getty Images.

So what

Early this morning, AMC announced that it will close all U.S. locations for 6 to 12 weeks beginning today in an effort to slow the roll of the novel coronavirus. Rival operator Regal announced a similar move Monday night. Both companies also confirmed that they will suspend charges on customers who have enrolled in their movie subscription plans, AMC Stubs A-List and Regal Unlimited.  

This means the chains forgo ticket and concessions revenue, as well as the recurring revenue streams from subscriptions that they've been feuding over ever since MoviePass forced them to offer subscriptions.

At this hour, smaller cinema chain Cinemark hasn't followed suit, but with these two chains leading the way, the chances are greater than 50-50 that it will do so soon.  

Now what

Thus, the revenue bonanza that movie theaters might have expected to reap from bored students being sent home from shuttered schools seems unlikely to materialize. Instead, these companies will face an even worse fate than their restaurant peers, since there's no "take-out" or "home delivery" for movies.

But as shares of American movie chains plummet, shares of Central European Media Enterprises are rising today. The company broadcasts on 30 television channels spread across Bulgaria, the Czech Republic, Romania, the Slovak Republic, and Slovenia, and operates the Voyo streaming service. So investors (in Europe at least) have just figured out that when movie theaters close, people will find their entertainment on TV and streaming services instead.

Good news for Central European Media Enterprises stock, and perhaps for a few streaming providers here in the U.S. as well.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cinemark Holdings, Inc. Stock Quote
Cinemark Holdings, Inc.
$15.72 (4.45%) $0.67
Central European Media Enterprises Ltd. Stock Quote
Central European Media Enterprises Ltd.
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
$11.88 (14.34%) $1.49

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.