Blockbuster movies are back and crowds are flooding Cinemark theaters
Cinema attendance is gradually returning to historic levels and it's time to buy cinema operators. This company's free cash flow actually surged more than 1000%!
Just as Hollywood seemed to be recovering from its pandemic woes, the industry had to contend with worker strikes, which caused production delays and shifted big release dates. But we’ve finally moved past that, and 2024 is here, bringing with it exciting movies, including The Fall Guy, Kingdom of the Planet of the Apes, The Garfield Movie.
According to a study by S&P, survey data showed cinema attendance fell by half in 2020 compared to the previous year in most markets including the US and Europe. The data indicates that cinema attendance has gradually rebounded in subsequent years, but as of 2023, it still has not returned to pre-pandemic levels. In South Korea, 79% of internet adults attended the cinema in 2023, compared to 84% in 2019. In Germany and the US, 68% and 57% of internet adults, respectively, attended the cinema last year, both representing an 11 percentage point decline from 2019.
But the trend still points up, and we might see further improvement in attendance in 2024 and 2025 - similar to what has played out in airline traffic and cruises. Airports were hit badly when the pandemic broke out. No one was travelling. But now, vaccines have been administered across countries, authorities eased restrictions, airports are full and more people are travelling overseas.
It could play out for cinemas. People avoided going to theaters because of fear of the virus. But the numbers are creeping back up.
Streamers
Of course, the major argument against cinemas is the rising popularity of home-viewing apps like Netflix.
Streaming services like Netflix are producing over 6,000 original titles, including television series, documentaries, movies, stand-up specials, and interactive specials. Should the company continue this trajectory, it will likely reach a point at which it will wholly produce original content.
Streaming services are challenging production studios as the producers of films and television shows. Should streaming services continue investing in original content production, this could lead to an even greater diversity of voices and perspectives represented in the entertainment industry. As these services grow in popularity, their impact on the film industry will continue to evolve, requiring traditional distribution channels to adapt and find ways to coexist.
Our quant model is suggesting to buy Cinemark Holdings Inc.
About Cinemark Holdings
This is a potentially a recession proof play as people still go to the cinemas in an economic downturn
Cinemark increased market share over the years
Its growing presence in Latin America is commendable.
Free cash flow increased 1069% in 2023!!
Here is the Cinemark advantage over competitors
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Disclaimer
We own positions in Cinemark Holdings. Seven Fat Cows is not a financial adviser. You should seek independent legal, financial, or other advice to check if the information from this website relates to your unique circumstances.