Cineworld shares: Hargreaves Lansdown investors are buying. Should I buy too?

first_imgCineworld shares: Hargreaves Lansdown investors are buying. Should I buy too? Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Simply click below to discover how you can take advantage of this. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Enter Your Email Address I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. “This Stock Could Be Like Buying Amazon in 1997” Like this one… Edward Sheldon, CFA | Wednesday, 2nd December, 2020 | More on: CINE Cineworld (LSE: CINE) shares are hot right now. Last week, Cineworld was the fourth most purchased stock on the Hargreaves Lansdown investment platform.It’s not hard to see why investors are piling into the FTSE 250 stock at the moment. This year, Cineworld has been hit hard by the coronavirus pandemic and its share price has tanked. The successful rollout of a Covid-19 vaccine, however, could change the outlook for the cinema operator dramatically. Since Pfizer announced that it has developed an effective vaccine, CINE shares have staged a spectacular rebound.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…I think Cineworld shares could potentially keep rising in the short term. Right now, there’s a lot of optimism towards stocks that were crushed during the pandemic. That said, I wouldn’t buy the FTSE 250 stock today. Here are three reasons why.Cineworld has a monstrous debt pileOne thing that concerns me about Cineworld is the mountain of debt on the company’s balance sheet. In a recent update, the company advised that it now has aggregate gross debt financing of $4.9bn. When you consider that viewers are unlikely to rush back to cinemas post Covid-19, this amount of debt adds a lot of risk to the investment case. A recent article in The Financial Times suggested that even if lockdowns end and viewers return, Cineworld may need shareholders to inject as much as $2bn into the company, or risk lenders taking control. This kind of capital raising could limit share price upside.Viewer habits are changingAnother issue that concerns me is viewers’ habits. These may have been permanently altered by the coronavirus pandemic. These days, a lot of people have large televisions at home. Many people also subscribe to streaming platforms such as Netflix, Disney, and Amazon Prime. With filmmakers now starting to release movies direct-to-consumer (such as Borat Subsequent Moviefilm) through these platforms, the cinema industry could be set to face massive structural challenges in the years ahead as people opt to watch films at home.Hedge funds expect Cineworld’s share price to fallFinally, it’s worth pointing out that Cineworld is currently the second most shorted stock in the UK according to shorttracker.co.uk. At present, eight funds have short positions over 0.5%, with total short interest amounting to a high 8.8%.This level of short interest is worrying. It suggests that hedge funds are betting heavily that Cineworld’s share price will fall. Short sellers don’t always get it right, of course. But quite often, they do. Carillion, Debenhams, and Thomas Cook are three UK stocks that have been heavily shorted in recent years and look what happened to them. I wouldn’t want to bet against the short sellers.Better stocks to buyOverall, Cineworld shares look risky to me. The balance sheet is awful and the company looks set to face structural challenges going forward.All things considered, I think there are much better stocks to buy right now. Our 6 ‘Best Buys Now’ Shares See all posts by Edward Sheldon, CFA Image source: Getty Images Edward Sheldon owns shares in Amazon and Hargreaves Lansdown. 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 owns shares of and has recommended Amazon, Netflix, and Walt Disney. The Motley Fool UK has recommended Hargreaves Lansdown and recommends the following options: long January 2021 $60 calls on Walt Disney, short January 2021 $135 calls on Walt Disney, long January 2022 $1920 calls on Amazon, and short January 2022 $1940 calls on Amazon. 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.last_img read more