Cineworld Group Plc’s shares have dropped 88 per cent since the start of the year. A phalanx of short sellers still think they’re overvalued.

Shares in the London-based cinema chain plunged 36 per cent on Monday after the company said it was suspending operations at U.S. and British theaters. The drop represented a paper gain of 38.2 million pounds (US$49.4 million) for short sellers, according to Bloomberg calculations based on IHS Markit Ltd. data.

The investors, who borrow shares with the aim of selling first and then buying them back at a lower price, are eyeing even bigger profits. They bet against 29 per cent of the company’s freely traded shares as of Tuesday, the highest level this year, according to data from IHS Markit.

“There is still a fundamental concern on the outlook for the industry,” said Natasha Brilliant, an analyst at Citigroup Inc., citing conversations with short sellers. The company had “structural problems, debt problems and governance problems and some near-term challenges with a weak film slate, so it even went into Covid as a pretty disliked stock.”

A representative for Cineworld declined to comment.

Analysts are more positive, with four of the brokers tracked by Bloomberg rating the stock a “buy” and four advising investors to hold the shares. Two recommend selling. The average 12-month price target suggests that the battered stock could gain about 145 per cent, according to data compiled by Bloomberg.

Cineworld isn’t the only cinema operator that short sellers are targeting. Short interest in U.S. peer AMC Entertainment Holdings Inc. was at 40 per cent of free float, while bets against Cinemark Holdings Inc. were at 26 per cent of free float as of Tuesday, according IHS Markit data.

Cineworld had started to reopen its theaters after lockdowns, meant to contain the spread of the COVID-19 pandemic, began to ease, but it’s been plagued by film delays. The postponement of the latest James Bond film was a “huge blow,” Chief Executive Officer Mooky Greidinger said in an email to staff.

Other worries investors might have about the cinema chain include the threat to the exclusivity window that theaters have before films are available on streaming services, such as Inc.’s Prime and Netflix Inc., the company’s high debt load and a lawsuit from rival Cineplex Inc. following a failed merger, Brilliant said.

“It’s an aligning-of-stars of things that short sellers quite like,” she said.