Cineworld (LON: CINE) share price has been rising for the past few days. The positive price action by the stock is surprising for many analysts as the retail shareholders are expected to be wiped out soon. This is because the new restructuring plan doesn’t award the existing shareholders in any way.
The FTSE 100 index has shown a very strong recovery in July. This has led to a market-wide positive sentiment. As a result, Cineworld shares have been up 30% from their monthly lows. However, this price action appears to be only driven by short-term traders and scalpers.
The box office success of the recently released Hollywood movies Barbie and Oppenheimer has generated interest in Cinema stocks. The recent surge in Cineworld share price can also be attributed to this trend. However, while there are many other theatre chains that could be a good buy right now, Cineworld is not one of them.
The reason why it is foolish to invest in Cineworld plc right now is because its stock could be delisted anytime. The firm has already filed for administration, and the stock is expected to be delisted after the appointment of administrators.
It is worth mentioning here that as per the proposed restructuring plan, the LON: CINE holders are set to get virtually nothing. Their investments will be worthless once the stock gets delisted from the London Stock Exchange. Therefore, I won’t be touching these shares even with a ten-foot pole.
Cineworld share price appears to be luring inexperienced investors by depicting a positive price action. If you want to invest, then you must know that the assets of the theatre operator are about to be transferred to a new holding company. The Cineworld lenders will control this new company.
Don’t let Cineworld share price action disappoint you, as there are still plenty of good setups in the market. I keep mentioning such opportunities on my Twitter, where you are welcome to follow me.
This post was last modified on Jul 24, 2023, 14:32 BST 14:32