A short thread for cinema and hospitality geeks. This graph of the 5 year share prices of #cineworld and #amc tells two interesting stories. 1/6

The first story, obv, is about the impact of months of closure - any hospitality business has high operational gearing and the impact of even a small downturn in business on profits can be severe, let alone a full scale shutdown. But the more interesting story lurks behind. 2/6

It is the story of what happens when businesses go on debt-fuelled global expansion sprees. AMC's started in 2016 with the purchase of (ahem) Odeon and others. Cineworlds was more recent, with the acquisition of Regal and the now-disputed acquisition of Cineplex. 3/6

In both cases, the acquisition runs involved taking on lots of debt, and in both cases the markets have punished that - the downward slope on historically strong share prices in the months after the acquisitions is clear to see. 4/6

And that, I think, has broader implications for other businesses too. The global consolidation in cinema was regarded as almost inevitable in the industry, too obvious to merit discussion. And yet the markets and investors have penalised, not rewarded it. 5/6

And if that was true pre-Coronavirus, how much more scared will investors be of big debt burdens in the future?
Perhaps in hospitality, small will turn out to be beautiful, for investors as well as customers? 6/6