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The digital asset and NFT boom: here’s why popularity is soaring!

financialnews1 on December 1, 2021

Image source: Getty Images

NFTs or non-fungible tokens have exploded in popularity this year. So much so that Collins English Dictionary named ‘NFT’ as the 2021 word of the year, putting it alongside previous winners such as ‘lockdown’, ‘fake news’, and ‘Brexit’. It’s in interesting company, I’m sure you’ll agree!

Why has this term become so popular? And why are these digital tokens all the rage right now? Read on to find out the latest scoop from the world of digital assets.

What is an NFT?

An NFT is a one-of-a-kind digital token. This means it represents an individual piece of code stored on a blockchain that cannot be duplicated or replicated.

To explain them in an easy way, I’m going to use an analogy. Picture the blockchain as a wall and an NFT as a digital certificate that represents a small carving in one of the bricks. So, imagine the blockchain is one long piece of wall that’s continuously expanding and these inscriptions are permanent parts of the wall.

The NFT token that proves ownership of the brick with an individual carving can be transferred between people. But all this history of bricks and carvings on the wall (the blockchain) cannot be tampered with or changed.

You’d have to tear down the whole wall (blockchain) in order to wipe away the ownership history and transactions. it’s something that isn’t likely to happen with large cryptocurrency blockchains.

Why has the NFT space become so popular?

These digital tokens have been soaring in popularity over the past year, and Google searches for the term have gone up by 5,425% between January and October!

Adam Morris, NFT expert at community platform NFT Club, explains this boom: “Despite what some people may think, NFTs have mostly been a natural progression. They were present in the 2017 crypto hype, but people were just starting to understand cryptocurrency, so NFTs were too advanced for that time.

“Within this recent crypto rally, there are more people who are experienced in the industry as they went through the 2017 cycle, so as a result, a lot of people who understood the ins and outs of crypto were looking for the next ‘thing’.”
 
“Currently, the top end of the NFT market is mostly made up of successful business people and people who did very well off cryptocurrency. This is why the price tags on some NFTs are so high, simply because these people have the money to spend.”

What do you need to be wary of when it comes to the NFT space?

Crypto is still a developing industry, and NFTs are a relatively new branch within the space. So you can think of them as a new concept within a slightly less-new concept. For any Christopher Nolan film fans out there, you could call it ‘crypto-ception’ – a dream within a dream.

Adam Morris goes on to explain why you need to tread carefully if you’re thinking about involving yourself with NFTs: “Just like any market, there will be a correction and because NFTs are new, it’s more likely to be a very large correction.

“Similar to how the crypto market was in 2017, people are just discovering NFTs and there is a lot of excitement. At some stage, it will reach a tipping point and most NFTs will drop substantially in value.

“However, NFTs and the technology behind them are definitely here to stay. With the announcement of Facebook rebranding to Meta and the amount of effort they are putting into creating the Metaverse, NFTs have a large role to play in this futuristic setting.”

The content in this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets. They carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

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George Sweeney (DipFA)

George is a writer and qualified financial adviser focused on educating others in personal finance & investing.


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Outside the Box: The good news about the economy that you’re not hearing enough about

financialnews1 on December 1, 2021

 

Over the last several weeks, headlines about inflation and the U.S. supply chain have been unavoidable. While news about the costs of everyday items and the ways in which the COVID-19 crisis has snarled the supply chain are certainly newsworthy, there are two other economic indicators that are just as—if not more—important but receiving less coverage: gross domestic product (GDP) and employment.

It may be surprising to some but there is actually a lot of positive economic news on these two fronts. In fact, the U.S. economy has recovered faster than comparable countries, continues to grow at a rapid pace, and is recovering jobs lost to the pandemic much faster than anticipated.

Follow the economic news and views on MarketWatch

Last year, when the pandemic hit, the United States experienced its worst economic downturn since just after the Second World War, declining by 3.4% in 2020. The unemployment rate also reached 14.8% in April 2020, the highest since the monthly employment report began in 1948. Decisive action by the Biden administration through the American Rescue Plan and its historic vaccination program has accelerated the economic recovery to the point that we have not just regained all the output lost during the pandemic recession; we have even passed our pre-pandemic levels, meaning the economy is now larger than it was at the end of 2019. 

The U.S. is doing better

 The U.S. recovery is all the more extraordinary because it is so unusual: the U.S. is the only leading advanced economy to have exceeded its pre-pandemic levels, according to the Organization for Economic Co-Operation and Development. In fact, data from the most recent quarter shows that our real GDP—which is GDP adjusted for inflation—is around 13% larger than the end of the COVID-19 recession.

What is even more noteworthy is that we are recovering much quicker in comparison to our two most recent recessions. After the end of the 2008 recession, it took 66 months, or 5.5 years to get to around 13% of its end of recession levels. After the end of the 2001 recession, it took 51 months, or more than 4 years, to get to that point. While GDP is not a comprehensive measure of well-being—such as by not counting the unpaid labor mostly provided by women—it is a rough predictor of our living standards. That means a much faster economic recovery as measured by GDP is a welcome and necessary change to past downturns. 

 There is more good news in the labor market. The unemployment rate—which reflects those not working but available and actively looking for work—has declined quickly, and much faster than predicted. Last month, the unemployment rate fell to 4.6% two years ahead of what the Congressional Budget Office had forecast. Unemployment insurance claims continue to improve, with the four-week moving average at the lowest level since the early days of the pandemic. Similar to GDP, employment has also recovered much quicker than after prior recessions—employment is back to at least 97% of pre-pandemic levels, gaining back more than 80% of pandemic job losses. 

The American Rescue Plan

But this type of accelerated economic and labor market recovery did not just happen by accident. This economic recovery is thanks in part to intentional fiscal policy—the American Rescue Plan—which ensured the mistakes of the past were not repeated.

Active fiscal policy made a big difference in the recent recession, keeping household incomes from falling as they typically do during downturns. That support is now fading.

Direct stimulus checks of up to $1,400 per person, among other policy measures, have helped to ensure that real spending is at an all time high—not just merely recovering pandemic losses but exceeding pre-pandemic levels. Child poverty has also been cut nearly in half thanks to the child tax credit payments. Since March 2021, when the American Rescue Plan was passed, 4.3 million more people have found employment. Wages and real disposable income are up, especially for low-wage workers, who are disproportionately women and people of color and who have experienced consistent wage growth since April 2021. 

More work needed

Despite this progress, more work is needed. While we are not out of the woods yet, the best economic policy in the short-term remains getting more people vaccinated. But we do not just want to go back to the way things were—we have to make up for decades of stagnant wages, a cost of living crisis where many households have struggled to afford basic essentials such as child care, housing, health care, among others, and gender and racial economic inequities.

The economy has not fully recovered and has yet to reach full employment—we are still down 5.5 million to 8.2 million jobs when accounting for pre-pandemic trends. Most important, a 4.6% headline unemployment rate hides the fact that many women and men of color, as well as people with disabilities, experience much higher unemployment rates. There are still too many people out of work, especially workers who face structural racism, sexism, and ableism in the labor market. 

Millions of jobs have been created since the worst days of the recession, but employment is still far behind where it ought to be. It’s no time to declare ‘Mission Accomplished.’

While we have learned from our past mistakes in prior recessions by ensuring GDP and headline unemployment recovers quickly, we must learn from past recoveries that we cannot leave anyone behind, notably women, people of color and those with a disability. Continued economic growth is a proven strategy to lift their wages and to ensure inclusive growth.

That is why it is crucial that the Senate pass the Build Back Better Act, which would help ensure people can go back to work and stay in jobs, while also lifting economic growth. Not passing the Build Back Better Act would put our historic recovery at risk. Despite the spate of negative economic headlines, the trajectory of the U.S. recovery has been too beneficial for workers and overall growth to withdraw support now.

Rose Khattar is the associate director of rapid response and analysis for the Center for American Progress and Andres Vinelli is vice president for economic policy at the Center for American Progress.

More coverage of the economy

‘Don’t freak out’: Omicron is bound to disrupt supply chains. The question is, how bad will it be?

Schumer presses for pre-Christmas Build Back Better vote as Biden highlights job-creation plans

Powell says Fed may end its asset purchases a few months early

Undervalued shares: 2 top UK companies that are still ‘on sale’

financialnews1 on December 1, 2021

As fears around the Omicron Covid variant temporarily pulled down markets late last week and early this week, investors scrambled to pick up undervalued shares. Unfortunately for some, it seems that the flash crash is over. However, there are still many great UK companies that continue to be undervalued by the wider market.

JD Sports Fashion (LSE: JD) has had a phenomenal 2021. The sports clothing retailer opened a further 600 stores around the world. And it increased its revenue to a new all-time high of £3.8bn. It also nearly tripled the pre-tax profits made in 2019, going from £158m to £439m. Yet right now, the share price is trading at 222p, down from 234p on November 18 (but up from 146p this time last year).

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

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Risks and rewards

Everything seems to be going well for JD but all is not perfect. It has been ordered to sell Footasylum, one of its subsidiary chains, over competition concerns. While it owns more than 50 brands, Footasylum is a very recognisable part of its business, bringing in an additional £232m in revenue in the 2021 financial year, even though this was down 6.8% from FY 2020 due to the pandemic.

Naturally being forced to sell a chunk of its operations isn’t ideal for a business, and I believe that concerns about how this will affect next year’s profits are keeping the share price down.

But JD remains a buoyant company with fingers in many pies in the UK and further afield. That includes sportswear, gyms, outdoor clothing and several other shoe brands. I think that its store expansion seen this year will continue to increase its earnings in 2022 and am more than happy to add it to my portfolio.

A lot to like

Wise (LSE: WISE), formerly known as TransferWise, is a UK-based financial technology company that allows its users to send money around the world quickly and cheaply, while offering some of the most competitive exchange rates on the market.

Wise first went public early this year and has naturally lost some of its value, falling from 880p in July down to 777p in early December. This is fairly common after an IPO as the market takes time to determine the true value of a share.

There’s a lot I like about Wise. As a tech company the majority of its operations take place online, resulting in lower overheads. It also earns cash by taking a small cut of each exchange, allowing the business to scale with user volume.

Customer numbers surged this year resulting in a 43% jump in revenue in Q1. Earnings have also doubled from 2020, although the margins have shrunk. Wise’s management decided to expand operations, develop new products and enter new markets. One of best products it offers is the borderless account and debit card, which allows people to spend money anywhere in the world, converting currencies at real-time exchange rates.

Its current market cap is £7.7bn but the share’s price-to-earnings ratio is uncomfortably high at 352.55. Investors clearly believe in the company but it’s still something that concerns me.

I think that the shares may be overvalued in the short term, but undervalued over the long term. Once more people learn of the borderless account, I think its user base will skyrocket. I definitely want to be owning Wise shares when that happens.

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  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

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James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

London Markets: U.K. energy supplier bankruptcies reach 25 as Zog collapses

financialnews1 on December 1, 2021

The U.K. Office of Gas and Electricity Markets on Wednesday announced the collapse of Zog Energy, the 25th provider to collapse as gas prices have surged.

Zog Energy supplied 11,700 customers, Ofgem said. “In recent weeks there has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers. Ofgem is working closely with government and industry to make sure customers continue to be protected this winter,” the regulator said.

Up 2% on Wednesday, the lead natural-gas contract
GWM00,
+1.55%
trading on the ICE futures exchange has surged 455% over the last 12 months.

The large-cap FTSE 100
UKX,
+1.39%
rose 1.4% to 7,158.32, bouncing along with other global markets as traders try to price in the likely economic impact of the omicron variant of coronavirus.

British Airways operator International Airlines Group
IAG,
+5.79%
surged 6%, and Premier Inn operator Whitbread
WTB,
+4.28%
added 4%. Engine maker Rolls-Royce
RR,
+2.89%
and broadcaster ITV
ITV,
+3.68%
also gained ground.

In the midcaps, Liontrust Asset Management
LIO,
+13.94%
jumped 13% after doubling its dividend as assets under management climbed 73%. Liontrust has benefited from demand for funds with an environmental, social and corporate governance focus.

The IAG share price fell 20% in November. Should I buy the stock now?

financialnews1 on December 1, 2021

The International Consolidated Airlines Group (LSE: IAG) share price fell by 20% in November. Shares in the owner of British Airways are now trading more than 15% lower than a year ago, despite a widespread return to flying over the last 12 months.

What’s gone wrong? The obvious explanation is the Omicron virus, which has triggered a raft of new travel restrictions in Europe and elsewhere. However, IAG’s share price slide started back in the summer. As I’ll explain, I think there’s more to this situation than the new variant.

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Reality check

Last month’s slide picked began after IAG published its third-quarter results on 5 November. I think one reason for this is that the Q3 numbers reminded investors that the airline business is still a long way from returning to pre-Covid levels of performance.

IAG’s airlines carried 43% of 2019 passenger numbers during the Q3 and 73% of 2019 cargo levels. These activities resulted in an operating loss of €452m for the three-month period.

Looking ahead, IAG hoped passenger numbers would rise to 60% of 2019 levels during the final quarter of the year. 

These numbers shouldn’t have been a surprise. But they seem to have provided a reality check for some investors, judging from the market reaction to the results.

Too high, too soon?

My concern is that IAG’s current performance is at odds with the group’s valuation. By the end of the summer, IAG had a higher valuation than it did at the end of 2019.

Even today, the airline group has an enterprise value of £16.5bn. That metric — which represents net debt plus the market value of the group’s shares — is almost exactly the same as at the end of 2019.

This doesn’t make sense to me. Broker forecasts suggest it will take two more years for the group’s profits to return to 2019 levels. In the meantime, IAG is unlikely to pay a dividend and could still face further challenges.

I reckon IAG’s share price got ahead of itself earlier this year. What we saw in November was simply an overdue correction, in my view.

IAG shares: will I buy?

I’m confident that IAG will make a full recovery over time. Now that the share price has cooled, should I consider adding a few to my portfolio as a turnaround play?

What concerns me is that IAG’s net debt has risen by 60% to €12.4bn since the end of 2019. As a result, the company’s equity value has fallen from €6.8bn to just €0.9bn. As a reminder, equity is simply the difference between a company’s assets (such as aircraft) and liabilities (such as loans).

In my view, buying IAG shares today means betting that the group’s airlines will be able to pay off their loans quickly and without further problems. This should restore equity value — and dividends — to shareholders.

This could happen — I do believe flying will recover. But it’s not a bet I’m comfortable with. Lenders’ requirements always come ahead of shareholders’ hopes. Any new problems could see the stock fall further. For me, IAG shares are too speculative at the moment. I’m staying away.

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While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

MarketWatch: Match settles lawsuit with former Tinder employees for $441 million

financialnews1 on December 1, 2021

Match Group Inc. disclosed Wednesday that it has settled a lawsuit with former Tinder employees led by Tinder cofounder Sean Rad.

Match
MTCH,
-3.05%
has agreed to pay the plaintiffs $441 million and the plaintiffs will dismiss their claims related to the valuation of Tinder in 2017. Rad and other former Tinder employees had alleged that Match understated the value of Tinder in 2017 so that their stock options wouldn’t be as valuable.

Match plans to pay the settlement using cash on hand, the company said in a filing with the Securities and Exchange Commission.

Shares of the online-dating company are up about 3% in premarket trading Wednesday. They’ve lost 15.6% over the past month as the S&P 500
SPX,
-1.90%
has declined 1.0%.

Treat the kids for free: 10 fantastic free Christmas activities!

financialnews1 on December 1, 2021

Image source: Getty Images

Trust me, as a Mum of four growing kids, I know what it’s like to have a tight budget! But I also love treating my kids. So I’ve picked some ways to treat the kids for free over the festive period, and I’ve found 10 fantastic free Christmas activities.

1. Take an evening walk to count Christmas lights

Every year there seem to be more and more Christmas lights – and I’m not complaining! It means that we can have lots of fun spotting all the lights on our road. It’s a great free Christmas activity that keeps the kids busy for several evenings. They love going out with Dad and counting how many houses have Christmas lights.

The kids love it (and secretly their Dad does too) because the number of houses with lights grows each week. Last year, by Christmas Day, there were more than 100 houses with lights on our street.

2. Enjoy hot chocolate and a Christmas movie

Curl up on the sofa and watch a cheesy Christmas movie with some hot chocolate. Home Alone, The Polar Express, and Miracle on 34th Street … it just wouldn’t be Christmas without them.

3. Take a trip into town to see the Christmas lights

We usually combine some last-minute Christmas shopping with seeing the Christmas lights in town. If money is tight, then there’s nothing wrong with Poundland treats for the Christmas stockings!

4. Bake some Christmas cookies or mince pies

We love Christmas baking activities like making mince pies and Christmas cookies. The cookies taste delicious, look amazing and can also double up as decorations for the tree – if they last long enough!

5. Make salt-dough decorations

Making salt dough decorations is great fun. There are lots of recipes online and the only limit is your imagination. You can also have fun painting or decorating them afterwards.

6. Make paper chains and snowflakes

You can buy packs of paper chains but actually making them is a fun Christmas activity that’s really easy. You can have fun creating your own designs. And who hasn’t been secretly proud of a snowflake that ended up looking amazing?

7. Decorate the tree

Forget matching or colour-coordinated decorations. We love to go old-school crazy with our Christmas tree: the more kitsch the better! Let your kids decorate your tree and go mad with the tinsel. Who cares? It’s Christmas! If money is tight, then you can have fun making paper decorations. Just watch out for all the glitter!

8. Put on a Christmas play

My girls love to put on their own plays all year round, and Christmas time is no different. They have come up with some absolute classics in the past. Like all Christmas activities, things can be unpredictable. Who knew that it was actually Santa who woke up Sleeping Beauty?

9. Have a Christmas karaoke or disco

Go on, you know you want to! Having a family karaoke party or disco can be absolutely hilarious. There are lots of playlists on Youtube, and watching Dad sing Last Christmas is bound to get you in the festive spirit.

10. Collect holly and mistletoe

There are lots of ideas online about how to make your own Christmas decorations with holly, mistletoe, ivy or other evergreen foliage. It’s free and looks fantastic. Just make sure that you’re foraging from public land and not someone else’s garden!

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About the author

Avatar for Alice Guy (FCA)

Alice Guy (FCA)

A Chartered Accountant, Mum and personal finance geek, Alice writes on topics including budgeting, saving and investing.


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

Metals Stocks: Gold futures edge higher, but dollar and yield moves hem in precious metal’s price

financialnews1 on December 1, 2021

Gold futures edged slightly higher Wednesday morning, staging a tenuous rebound on the session as the dollar traded flat but yields for government bonds climb, all factors that could prove a headwind for bullion.

The most active February gold contract
GCG22,
+0.78%
GC00,
+0.78%
was trading $2.30, or 0.2%, higher at $1,787.50 an ounce, following a 0.5% decline on Tuesday, which contributed to a monthly decline of 0.4% in November, according to Dow Jones Market Data.

Financial markets have been whipsawed by concerns about the omicron variant, which may have caused some selling of safe-haven metals, presumably, to meet margin calls.

Federal Reserve Chairman Powell on Tuesday surprised market participants by testifying in front of a Senate Banking Committee that speeding the tapering of monthly asset purchases when policy makers meet later this month could be warranted amid the new strain of the coronavirus.

Powell is slated to deliver a second day of testimony before lawmakers on Wednesday. Monetary policy makers meet on Dec. 14-15 for their final rate-setting gathering of 2021.

On Wednesday, the dollar was trading slightly higher, as gauged by the ICE U.S. Dollar Index
DXY,
-0.08%,
which was at 96.024. Meanwhile the 10-year Treasury note yields
TMUBMUSD10Y,
1.477%
around 1.48%, up from 1.44% at 3 p.m. Eastern Tuesday.

Richer yields can undercut appetite for bullion, as can a strengthening of the dollar which gold and other precious metals are priced in.

Meanwhile, in economic data, Automatic Data Processing Inc.
ADP,
-2.12%
indicated that private-sector employers added 534,000 jobs in November, better than a median forecast of 506,000 from economists surveyed by Dow Jones but down from the previous reading in October of 571,000.

Is Cineworld’s share price about to surge or sink?

financialnews1 on December 1, 2021

Cineworld Group (LSE: CINE) investors are enduring a wild time at the minute. Confidence in the UK leisure share is shaking wildly as developments surrounding the Omicron coronavirus variant come in. Today, news surrounding the variant hasn’t been as scary and so the Cineworld share price has leapt 7.5% in Wednesday trade.

2021 hasn’t been kind to the Cineworld share price. Since closing at peaks of 122p in March, it’s more than halved in value to current levels around 50.5p. Cineworld is now trading 21% cheaper than it was at the beginning of the year.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

So would I buy? In the case of high-risk shares like Cineworld, I think it’s especially important to get a range of opinions from other investors before buying.

Short stuff

Even the most experienced traders can get it wrong. But I think it’s worth gauging the views of hedge funds and institutional investors on Cineworld’s share price.

According to shorttracker.co.uk, a worrying 9.4% of Cineworld shares are currently being shorted. That’s up from 9.1% around a month ago and puts the leisure share clear at the top of the ‘most hated’ list.

News surrounding the Omicron variant has encouraged further short-selling. But the increased shorting of Cineworld’s share price began long before mid-November. Just 3.3% of its shares were being bet against six months ago.

Reasons to be cheerful

So where does the Cineworld share price go next? It’s not outside the realms of possibility that it will stride back towards March’s highs in the not-too-distant future. Studies showing that Omicron isn’t as dangerous as previously feared — a scenario that would vanquish fears that cinema’s could be closed en masse again — would be the most obvious near-term driver.

Cineworld could also leap again if box office stats from the US and UK continue to impress. Movie lovers have been returning to theatres in their droves since Covid-19 restrictions were relaxed earlier this year. Capacity at Cineworld’s sites in October clocked in at a reassuring 90% of the level in the equivalent month in 2019, latest financials showed.

Why I worry for Cineworld’s share price

All that being said, I’m afraid I won’t be taking a risk on Cineworld shares any time soon. My main worry over this UK share is the huge amounts of debt it still carries on its balance sheet ($8.4bn worth as of June). This could prove fatal if Omicron (or indeed any other Covid-19 variation) forces its theatres to close. At best, it casts a shadow over the company’s ability to invest in its operations for future growth.

This is particularly concerning given the rising popularity of Netflix and other streaming platforms. These companies are investing billions every year in content and technology to win viewers from other media.

Cinema operators will have to also keep splashing the cash on an enormous level to remain relevant and keep pulling in the punters. I think Cineworld’s share price could remain weak and possibly plummet, even if it manages to survive the Covid-19 crisis.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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