Cinemark Holdings Inc. (NYSE: CNK) shares tumbled 5.15% in the pre-market session on Thursday, as the movie theater chain's fourth-quarter results raised concerns about its ability to sustain profitability amid mounting challenges.
While Cinemark reported record revenue and strong financial performance for 2024, several factors contributed to the stock's plummet:
1) Earnings per share (EPS) for the full year missed analyst expectations by 5.4%, despite revenue being in line with estimates. This earnings miss raised concerns about the company's ability to translate top-line growth into bottom-line profitability.
2) Cinemark warned of increasing film rental rates in 2025 due to a greater concentration of blockbuster content, potentially impacting margins. Additionally, the company anticipates ongoing wage rate pressure and inflationary impacts on expenses, further squeezing margins.
3) Although Cinemark gained market share, analysts cautioned that these gains might temper as the box office recovers and auditoriums reach capacity limits, limiting further growth opportunities.
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