The Cineworld share price has been consolidating for the past few weeks as concerns about the soaring inflation intensify. The CINE stock has crashed by almost 93% from its highest point this year. Its total market capitalization currently stands at 42 million pounds.
Can CINE Be Saved?
Cineworld is the world’s second-largest cinema chain. The British cinema company operates in countries like the US and UK. The company makes most of its money from movie attendance tickets and other discretionary items like popcorn.
The coronavirus pandemic saw the company drown in huge chunks of debt as it fought for its survival. Earlier this month, the UK-based movie theatre chain filed for bankruptcy in Texas to tame its $5 billion debt pile. The company stated that it has been financially devastated by the closure of its cinemas due to the coronavirus pandemic.
However, analysts remain optimistic about the Cineworld share price. According to a report by Wall Street Journal, Canadian cinema chain, Cineplex, has approached bankrupt rival Cineworld’s lenders. According to the report, Cineplex is hoping for a potential merger with the British company’s US unit, Regal Entertainment.
Cineworld and Cineplex have been locked in a multimillion-dollar legal battle since the British company rescinded its offer to buy Cineplex more than two years ago. According to WSJ, Cineplex is in talks with Cineworld’s lenders about taking over Regal in exchange for debt and stock backed by the combined business.
Therefore, analysts are somehow confident that Cineworld could be saved by the potential merger with Canadian movie theater chain, Cineplex.
Cineworld Share Price Outlook
The daily chart shows that the CINE share price has been in a strong bearish trend for the past few weeks. At the time of writing, the stock had dipped 2.87% lower to $3.046. It is moving below the 25-day and 50-day exponential moving averages (EMA). Its RSI is at 30, the oversold region.
Therefore, before a decision between the two movie theatre chains is made, the Cineworld share price is likely to continue its bearish run. If this happens, sellers will target the next key support level at 1.425p. However, a move past the 25-day EMA at 4.92p will invalidate this view.