Shares of movie theater chains began to stage a recovery late last year following a protracted sharp downturn that was triggered by the onset of the COVID-19 pandemic in early 2020.
The space is witnessing an across-the-board sell-off Friday, although it is accompanied by less-than-average volume due to thin holiday trading.
What Happened: The stocks were reacting to the news of a new coronavirus variant, codenamed B.1.1.529 that has been identified in South Africa.
The new variant is the most heavily mutated version discovered so far, with scientists terming it as the worst variant they had seen. It was first discovered by scientists in South Africa and a few other countries have reported incidences of infection by the variant.
Why It's Important: The latest virus threat has forced governments to contemplate travel restrictions and cancellation of flights. Fears of another lockdown, shortly after the vaccine-driven economic reopening, does not bode well for theater chain stocks.
Most of these companies are deep in the red on the bottom line. Their only bet to turn things around is attracting increased attendance, which has only recently inflected higher.
Although not many details have yet emerged about how deadly the newest strain is and whether it can be tackled with the currently authorized vaccines and treatments, until clarity emerges things could be in a state of flux for movie theater stocks.
At last check, AMC Entertainment Holdings, Inc. AMC was down 5.96% at $36.61.
Cinemark Holdings, Inc. CNK was plunging 7.57% at $15.62.
Cineworld Group plc CNNWF was declining 12.12% to 65 cents.
IMAX Corporation IMAX was slumping 7.39% to $17.04.
The Marcus Corporation MCS was retreating 7.45% at $17.63.
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