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Analysis On The Regal Entertainment Group Stock RGC
Of the many industries most hit by the pandemic, the entertainment industry was significantly affected more than most.
Following the onset of the pandemic and abrupt lockdowns, businesses that once relied on large numbers of people to be able to turn a profit were now in trouble (Mazur et al., 2021).
The lockdown would carry on for several months leading to significant losses and even closure of so many businesses around the globe.
The Regal Entertainment Group is a cinema company that operates movies theaters in the United States of America. It trades on the New York Stock Exchange with the ticker symbol RGC
In the United States, the Regal Entertainment Group is a theater circuit management. The theatrical exhibition operations department oversees the company’s operations.
The company builds, purchases, and operates multiple screen cinemas predominantly in mid to largely populated cities suburban developing areas across the US. The business owns and operates multiplex cinemas.
Many factors can affect the operations of a business and sometimes even negatively. Due to this, it is possible for a company’s stock to deep below or goes above what is naturally expected.
But as many analysts will tell you, stock trading is all about collecting as much information as possible and using it to predict how the stock exchange will behave in the short or long term.
In the case of $RGC, you will want to make a mid to long-term investment. Coming from all the lockdowns affected by the pandemic, it is safe to say many entertainment companies experienced unfathomable losses (Akkermans et al., 2020).
Right before the pandemic, Regal would average around 23 dollars. In 2018, Regal experienced lows of approximately 13 dollars and highs of 23 dollars.
Most of the time, though, Regal maintained reasonable highs of up to 26 dollars with volumes upwards of 4 million dollars each day.
On Tuesday, October 24th, Regal Entertainment Group released its 2017 earnings results. The firm earned $0.07 per share (Yan et al., 2020), beating the consensus estimate of $0.04 by $0.03.
During the quarter, the company earned $716 million, compared to $701.66 million predicted by analysts. On a year-over-year basis, the company’s quarterly revenue was down 11.8 percent.
Last year, the company earned $0.29 per share in the same quarter (Hanson, 2019).
Following the postponement of the latest James Bond film until 2020, the Regal theater company shut down all of its 536 US sites and more than 7,000 panels, yielding to financial pressure.
The decision was made after movie theaters throughout the world tried to reopen with the movie “Tenet” and determined that most people were still avoiding these locations to avoid being exposed to COVID-19.
Regal, based in the United Kingdom, had to lay off around 40,000 Americans. There were concerns that Regal might declare bankruptcy, setting a precedent for the entertainment industry (Moon, 2020).
Looking at other Regal competitors, it is evident that the problems started long before the pandemic and that the pandemic only made things worse.
With a consistent drop in box office receipts corresponding to the rise in popularity of Netflix and other streaming platforms, AMC’s tragic price action in the last half of the decade exemplifies how industry woes started even before the pandemic (Nhamo et al., 2020).
The dynamic also underpinned the Marvel Cinematic Universe’s and other blockbuster franchises’ dominance, which studios could rely on to generate consistent revenues.
Regal Cinemas has reopened in the United States from April 2021, as lockdowns have eased. Cineworld’s movie theater chain was planned to reopen roughly 500 locations with a limited capacity based on local standards.
In most circumstances, attendance is limited to 25% and 50%. Warner Bros. decided to premiere all of its 2021 movies concurrently in cinemas and on HBO Max, its streaming service.
As a result, it had to restructure contracts with each cinema chain to guarantee that its pictures were shown on the big screen.
Cineworld is the newest cinema chain to accept these conditions and reach a long-term agreement with the Warner Bros studio, ensuring that after 2021, there will be a lengthier gap between a film’s theatrical release and its domestic market accessibility.
Warner Bros. and Cineworld $CINE have agreed to a multi-year deal starting in 2022 that requires Warner Bros. films to play in cinemas for 45 days before being released on streaming services.
The agreement in the United Kingdom is for 31 days, but it can be stretched to 45 days if the film opens with a large enough total gross (Akser, 2020).
With local limitations loosening throughout the world, Regal appears to be more confident in the ability of its cinemas to prosper and become profitable once more.
This is especially true in areas like California and New York, which, according to Comscore data, account for 21 percent of total US box-office receipts each year.
New York City accounts for approximately a quarter of New York’s entire box office, while Los Angeles contributes to roughly a third of California’s.
These cities are significant to the cinema industry in terms of financial well-being since they have better than average prices for tickets and customer density while being entertainment centers.
In conclusion, it has been rough for the cinema industry for two primary reasons in the last five years. One is the rise of online streaming like Netflix, which has led more and more people to watch from the convenience of their homes.
The second is the pandemic which is a factor that compounded the first problem.
With the end of the pandemic nearly insight and as things are slowly going back to normal, the entertainment industry is currently one of the best stocks to place your money.
The new deals struck between cinemas and moviemakers 45 days on theatres before a film can be shown on streaming services might be the “pick me up” the industry needed to thrive again.
Investing in Regal Entertainment Group stocks would be advisable in the long term because all these changes are gradual and will take time before they reflect, but they surely will in 12 months or so.
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References
Akkermans, J., Richardson, J., & Kraimer, M. L. (2020). The Covid-19 crisis as a career shock: Implications for careers and vocational behavior. Journal of Vocational Behavior, 119, 103434.
Akser, M. (2020). Cinema, Life and Other Viruses: The Future of Filmmaking, Film Education and Film Studies in the Age of Covid-19 Pandemic. CINEJ Cinema Journal, 8(2), 1-13.
Hanson, S. (2019). From Multiplex to Megaplex. In Screening the World (pp. 59-86). Palgrave Macmillan, Cham.
Mazur, M., Dang, M., & Vega, M. (2021). COVID-19 and the march 2020 stock market crash. Evidence from S&P1500. Finance Research Letters, 38, 101690.
Moon, S. (2020). Effects of COVID-19 on the Entertainment Industry. IDOSR Journal of Experimental Sciences, 5(1), 8-12.
Nhamo, G., Dube, K., & Chikodzi, D. (2020). Implications of COVID-19 on gaming, leisure, and entertainment industry. In Counting the Cost of COVID-19 on the Global Tourism Industry (pp. 273-295). Springer, Cham.
Yan, B., Stuart, L., Tu, A., & Zhang, T. (2020). Analysis of the Effect of COVID-19 on the stock market and investing strategies. Available at SSRN 3563380.
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