Cineworld (LON: CINE) (OTCPK: CNNWQ) shares really now need to have an objective, rational, valuation of zero. This might well not be what actually happens in the market because there are romantics and speculators always. But there is, now, seemingly no path at all to there being an equity value left. The correct reaction here therefore being well, it's been fun, now onto something else. Some r/wallstreetbets short squeeze like those that saved GameStop and AMC just isn't going to happen here. Nor is there some reservoir of unknown and suddenly discovered value as at Hertz.
Cineworld has been in Chapter 11 or some time now. Usually, in the past at least, this meant the equity went to zero. For the entire point of Chapter 11 was and is that the debts are higher than the obligations therefore the shares are worth nothing. There might be some trivial and highly diluted rump of equity available after reorganisation but no more than that - and often not even that. The speculative events of the past couple of years did change that perception. Hertz went bust because it couldn't finance the security on its bonds that financed the car fleet. Then used car prices jumped, there was indeed something left for the equity and so shareholders came out of Chapter 11 with something. Raging speculation in AMC led to recapitalisation, so too at GameStop. So, why didn't the same thing happen at Cineworld?
Cineworld share price from London Stock Exchange Well, it could have happened - it was at least theoretically possible. Win the Canadian court case, not have to pay damages there, a short squeeze, a new share issue and maybe - but that was all such a long shot. And not only did it not happen now this has: “Consistent with the Company's announcement on 24 February 2023, in light of the level of existing debt that is expected to be released under the Plan, the Proposed Restructuring does not provide for any recovery for holders of Cineworld's existing equity interests.”