Few stocks have endured the volatile ride in the past five-year period like Cineplex (TSX:CGX). But now that the fallout from the pandemic is long gone, can Cineplex stock continue to rise?
Let’s try to answer that question and determine if Cineplex stock really can continue to rise.
Cineplex has problems: Both old and new
The problems that Cineplex stock has can be traced back several years before the onset of the pandemic. That’s because Cineplex adheres to a century-old business model that hasn’t changed much in that time: the movie-and-popcorn business.
In short, Cineplex sells tickets to a show and then sells concessions to patrons to consume during that show. The model works, but it’s overly reliant on access to exclusive content and very dependent on the quality of content coming out of Hollywood.
Around the time that the pandemic started (if not just before), a new trend started – streaming. This allowed would-be patrons to view content from their living room, or any other device, without paying that admission.
As the pandemic developed, studios developed their own streaming apps and began showcasing exclusive content on those platforms. This meant that Cineplex lost its audience, the exclusive content, and any potential for concession sales.
To be fair, Cineplex was addressing its over-reliance on the theatre business with new initiatives such as its Rec Room entertainment venues. Unfortunately, these two were shuttered during the pandemic.
Cineplex Stock today: Signs of recovery, or new challenges?
Fast forward to today, and the Cineplex stock price has rebounded significantly. As of the time of writing, the stock has surged over 140% in the past five years, making it a stellar turnaround. Similarly, the company has shown improvements in its financial health, which has resulted in some investor optimism.
That being said, to answer whether Cineplex can continue to rise is dependent on several key factors. Financial results, industry recovery, changing habits, and competition.
Let’s break those down.
On the financial front, Cineplex is due to report on its third fiscal on November 6. Until then, let’s look back at the most recent update for Q2.
In that quarter, Cineplex saw revenue come in at $361.8 million, reflecting a solid 30% gain over the prior year. Those gains extend to the number of guests the company welcomed into its theatres, which saw a similar 32.7% increase to 11.6 million.
Media revenue surged 9.1% over the prior quarter, and Cineplex’s premium experiences accounted for 46.2% of box office revenue.
Finally, the company reported that box office per patron and concession per patron numbers set quarterly records at $13.68 and $10.04, respectively.
In short, Cineplex’s numbers are improving. But it’s still pushing for more.
Box office and beyond
Earlier this month, Cineplex also announced it was divesting its Digital Media business to U.S.-based Creative Realties Inc. for $70 million in cash. Cineplex will use the funds from that transaction to pay down debt and provide capital for share buybacks.
Despite the sale, Cineplex will retain exclusive rights to sell advertising across CDM’s Canadian network as part of a long-term agreement in the deal. This allows Cineplex to still earn some revenue from the segment, despite no longer owning it.
The box office was always the other concern. Fortunately, 2025 proved to be a strong pull for Cineplex’s box office, especially when compared to prior years that dealt with the pandemic and then the Hollywood writers’ strike.
That being said, box office numbers are still below pre-pandemic levels, but further growth is expected.
The silver lining in the box office revenue story is premium experiences. It already drives a huge amount of the company’s revenue, and it’s likely to continue contributing a growing share of revenue.
Cineplex also plans to expand its Rec Room and Playdium venues, as part of the push into location-based entertainment.
Final thoughts on Cineplex stock: Should you buy?
No stock is without risk, and that includes Cineplex. The company has endured massive change over the past five-year period and continues to evolve with the market.
Financially, the entertainment firm is improving, and from a business perspective, Cineplex is laser-focused on growth and returning value to shareholders.
For investors with a long-term view, Cineplex may warrant a small position in a larger, well-diversified portfolio.
