My Cineworld Share Price Forecast Was Spot-On. What Next?

Summary:
• Cineworld share price has staged a slight recovery in the past few days after the company made some financing progress.

Cineworld share price has staged a slight recovery in the past few days after the company made some financing progress. CINE shares rose to a high of 6.92p, which was the highest level since August 19th. It has jumped by 110% from its lowest level this year. Still, this price is about 97% from its highest point in 2021, giving it a market cap of over 50 million pounds.

Why is Cineworld recovering?

Early this year, I warned that Cineworld was facing existential risks that could push the company out of business. It had massive debt while the recovery of the movie theatre industry has been substantially slower than expected. At the same time, the company was facing a major lawsuit from Cinemark, a leading Canadian company. 

The Cineworld bankruptcy prediction was accurate as the company decided to file recently. It hopes that the decision will help it to negotiate its debts and even halt the lawsuit by Cinemark. Cinemark alleges that Cineworld withdrew its bid for the company in an illegal manner. It hopes to collect about $1 billion from the company.

The Cineworld share price made some recovery after the company’s liquidity improved. A bankruptcy judge game the company’s immediate access to about $785 million of a financing facility. Cineworld hopes that it will use these funds will help continue as a going concern since it had only $4 million in cash. 

Still, the company is still at risk considering that it has over $8 billion in debt and the movie industry is going through a tough period. There is an ongoing box office drought as more companies in the industry focus on their streaming ventures.

Cineworld share price forecast

The daily chart shows that CINE share price has made a strong recovery recently after the financing agreement. This price action is in line with that of other companies that file for bankruptcy. It has moved below the 25-day and 50-day moving averages while the awesome oscillator remains below the neutral point.

Therefore, the stock will likely continue falling as sellers target the year-to-date low of 1.83p. A move above the resistance at 6.74p will invalidate the bearish view.