Please ensure Javascript is enabled for purposes of website accessibility

Layoffs at Cinemark Highlight the Dire State of the Movie Theater Industry

By Keith Noonan – Apr 15, 2020 at 10:42AM

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

Movie theater stocks now trade at what would have previously been basement-level valuations, but it's unclear whether they're actually good values.

Cinemark Holdings' (CNK -3.51%) most recent filing with the Securities and Exchange Commission show the company had laid off 17,500 workers and furloughed half of its corporate employees at a 20% pay rate, according to a report from TheWrap. The drastic layoffs and pay reductions at the company are just the latest sign of the perilous state of the movie-theater business amid closures stemming from the novel coronavirus pandemic. 

Cinemark is far from the only theater company feeling the heat. Reports suggest AMC Entertainment (AMC -1.83%) is likely to file for bankruptcy as a result of pressures stemming from the crisis, and most major theater chains have been hit with stock and credit-rating downgrades due to the fact that there's little visibility as to when or whether business for the industry might return to normal. 

Empty theater seats.

Image source: Getty Images.

What's next for the movie theater industry?

Many movie theater chains were already facing pressure from streaming video competition and movie production companies pushing for a bigger chunk of ticket sales or preferential showcasing, and it looks like the novel coronavirus pandemic will have a prolonged impact on the industry. Even if business restrictions are lifted and cinemas are allowed to reopen, there's a fair chance people will be less inclined to visit movie theaters.

Some reports suggest businesses could reopen at some point within the next couple of months and pave the way to a state of normalcy, but a report from the Harvard School of Public Health indicates some degree of social-distancing measures could be needed into 2022. To put it in simple terms, things have never looked worse for the movie theater industry.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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.
$12.11 (-3.51%) $0.44
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
$6.97 (-1.83%) $0.13

*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 analyst team.

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 09/30/2022.

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.