Cineplex (TSX:CGX) stock plunged 12.38% on March 30. The company is facing one of the biggest challenges in years as the COVID-19 outbreak has forced the shutdown of entertainment sites across North America. Cineplex is no different, and this month it announced the closure of its theatres across Canada.
On March 29, Cineplex announced that it would enact mass layoffs due to store closures across the country. The closures are currently in place until April 2 but are certain to be extended with governments opting to lengthen social distancing measures in a bid to “flatten the curve”.
However, the company says it plans to re-hire laid off workers when conditions normalize.
This environment has driven even more consumers into the arms of streaming services, which posed a huge threat to the theatre business before this world-altering pandemic. Top blockbusters are being routinely pushed back, which has provoked a positive spin from some analysts.
Some are optimistic that a flurry of popular releases may lead to a consumer rush when theatre doors do eventually open.
As far as income investors are concerned, Cineplex does not hold any appeal right now. It suspended its dividend payout amid its mass closures.
The stock has plummeted 64% over the past month. We are all hoping for a return to normalcy when officials get a handle on this health crisis, but there is no guarantee that demand will quickly snap back. If the stock challenges its 52-week high, I’d be more interested in jumping in.