Cineworld Stock Hits 5-Month High As U.K. Approves COVID-19 Vaccine

Cineworld
Courtesy of Cineworld

Cineworld in London's Leicester Square

The world's second-largest exhibition chain, which owns Regal in the U.S., is hoping to reopen its cinemas in early 2021.

News that the U.K. has become the first western country to license a COVID-19 vaccine has seemingly sparked immediate optimism for the local exhibition industry, with shares in beleaguered cinema giant Cineworld, which owns Regal in the U.S., hitting a five-month high.

U.K.'s regulatory body on Wednesday announced it had authorized the use of the Pfizer/BioNTech vaccine ahead of decisions in the U.S. and Europe, with 800,000 doses expected to be made available as early as next week. The U.K. has bought 40 million doses of the vaccine, which has been shown to have 95 percent efficacy in its final trials.

Cineworld has been among the exhibition giants hardest hit by the pandemic. The group was forced to close all its 127 U.K. sites during the first lockdown and recently decided to temporarily shut them all again, citing the lack of major new releases from the Hollywood studios. The company generates around 15 percent of its revenue in the U.K. and Ireland. The bulk of its earnings, around 73 percent, comes from the U.S. market.

Cineworld's stock on Wednesday morning jumped to £0.64 ($0.86), it's highest level since early July. Cineworld shares hit an all-time low of £0.21 in March amid the first U.K. lockdown. The stock has been quietly climbing since late October, tracking positive announcements surrounding coronavirus vaccine trials. But Cineworld shares are still worth a fraction of their pre-pandemic levels when the stock was trading at around £2.20 ($2.95).

The company recently revealed it had secured a new $450 million debt facility and was implementing operational measures to give it $750 million in extra liquidity to keep it afloat amid the COVID-19 pandemic. The base scenario for this arrangement assumed a reopening of cinemas no later than May 2021, which news of the vaccine approval and rollout in the U.K. would strongly suggest is now achievable, at least for its British operations.