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Why Cinemark Holdings Was Jumping 10% Higher Today

By Rich Duprey - Sep 2, 2020 at 3:35PM

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Theater operators are counting on the coming holiday weekend to boost their fortunes.

What happened

Shares of Cinemark Holdings (CNK -13.44%) were jumping 10% higher in afternoon trading Wednesday after rival AMC Entertainment Holdings (AMC 18.86%) updated the markets on its reopening plans following yesterday's close. AMC's stock was up 17%.

So what

The movie theater industry was devastated by the coronavirus pandemic, which forced operators to close all of their theaters for five months, a condition that nearly bankrupted AMC. But they recently began reopening, and yesterday AMC said it would have 70% of its locations open in time for the upcoming Labor Day holiday weekend.

Woman wearing mask sitting in theater

Image source: Getty Images.

Now what

Cinemark operates 534 theaters with almost 6,000 screens in 41 states and 15 countries. It began the process of reopening all of its locations on Aug. 14 and finished on Aug. 28, well ahead of its rival.

It seems well positioned to capture a good percentage of the latent demand among moviegoers to return to the cinema to receive the full theater experience. Regal Theaters parent Cineworld Group (CNNW.F 10.64%) recently said many of its movies were sold out after they reopened.

Of course, the caveat is that theaters have enacted social-distancing protocols that reduce capacity by a third or half, which means there were only a handful of patrons to 100 or so at a showing depending upon the size of the theater.

Still, many people feel there's nothing that compares to seeing a movie up on the big screen and they're hankering for the theater's return.

 

Rich Duprey 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.

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Stocks Mentioned

Cinemark Holdings, Inc. Stock Quote
Cinemark Holdings, Inc.
CNK
$16.75 (-13.44%) $-2.60
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$22.18 (18.86%) $3.52
Cineworld Group plc Stock Quote
Cineworld Group plc
CNNW.F
$0.28 (10.64%) $0.03

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

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