What happened

Shares of movie theater chain Cinemark Holdings (CNK -1.98%) were plummeting today, down 14.3% as of 2:11 p.m. ET.

Shares were lower following last night's earnings report, even though the company beat revenue expectations. It might have had something to do with management's commentary that the current quarter may be more challenged, thanks to an air pocket of new releases in August and September.

So what

Cinemark actually posted a relatively strong second quarter, with revenue up 152.6% to $744.1 million, beating analyst estimates, as the theater chain strongly recovered from the pandemic. Management also noted the company outperformed the industry recovery by 3 percentage points and 4 percentage points internationally.

The bottom line fell short of analyst expectations, as the company posted a loss of $0.61 per share. However, that was largely the result of a noncash impairment charge of $92.3 million. Without that charge, the $18.6 million second-quarter operating loss would have flipped to $73.7 million in positive operating income.

Yet as with so many earnings releases, the stock reaction wasn't so much due to past numbers but rather forward guidance. In conjunction with the earning release, CEO Sean Gamble noted August and September would be more difficult, as there were fewer big releases before the busier fall and holiday seasons. Last quarter benefited from several high-quality blockbusters such as Top Gun: Maverick. With no such blockbuster in the cards for the late summer, investors are growing nervous about the fragile industry recovery.

Now what

Cinemark trades at a $2 billion market cap and around a $3.8 billion enterprise value. Prior to the pandemic in fiscal 2019, the company made around $191 million in net income, but those profit figures weren't growing.

So even though theaters haven't fully recovered yet, it appears investors have mostly anticipated things getting "back to normal." As we've seen, the post-pandemic economy is still susceptible to inflation shocks, new COVID-19 variants, and other concerns such as Monkeypox. Oh, and the threat of streaming still looms over the theater industry, as it was prior to the pandemic. 

Therefore, it appears investors are right to be cautious these days, as the bumpier reality is colliding with expectations of a full theatergoing recovery.