AMC (AMC) stock closed Wednesday’s trading session down nearly 3% after surging on Tuesday following a report from intersection which claimed that tech giant Amazon (AMZN) is interested in acquiring the beleaguered theater chain.
Amazon founder Jeff Bezos is exploring plans to buy AMC in order to use its more than 600 theaters to promote Amazon Prime movies and cross-selling services like grocery delivery, said the report, which cited “several senior sources familiar with the discussions.” AMC CEO Adam Aron declined to comment to Yahoo Finance.
Not everyone is buying into an agreement like this, however, as Wedbush analysts Alicia Reese and Michael Pachter write in a new note: “Amazon would be better off buying a piece of cinemaworld,” any Filed bankruptcy in September 2022.
“Amazon can buy 1,000 screens for $200,000 a screen, or $200 million. Why would Amazon choose instead to buy 10,000 screens for $8 billion?” Analysts wrote, noting AMC’s heavy debt load of $4.6 billion, as well as the stock’s inflated valuation.
“The bottom line is that Amazon has no interest in being in the theatrical space to make money,” the memo added.
“It makes absolutely no sense for someone to buy AMC and take over its debt rather than buy Cineworld out of bankruptcy,” Pachter told Yahoo Finance Live on Wednesday.
He continued, “There is no point in Amazon buying a company that has debt.” “This is a stupid concept. I would demote Amazon if they did something as stupid as buying AMC. That [would] Displays [Amazon CEO] Andy Gacy has no idea what he’s doing.”
Ultimately, Butcher said he did not see Amazon acquiring Cineworld, explaining that such a move would not make strategic sense for the company.
The biggest acquisition [Amazon] Ever been Whole Foods. That was a company with $4-$5 billion in revenue, and Amazon needed strategic access to home delivery of groceries. “It doesn’t make sense,” he said.
Tuesday’s report also comes at a time when the tech giants are investing heavily in entertainment, despite cutting costs in other areas.
last week, bloomberg It was reported that Apple plans to spend $1 billion annually to produce films that will be released in theaters. Similarly, Amazon has formulated plans to invest $1 billion to produce 12-15 movies a year exclusively for theaters, bloomberg reported in november. Amazon finalized its $8.5 billion deal to acquire MGM early last year.
Theaters, still reeling from the pandemic, have yet to see ticket sales return to pre-pandemic levels — despite blockbuster offerings from films like “Avatar: The Way of Water,” “Creed III,” and “John Wick: Chapter 3.” “
Across the top 5 studios, 2022 global box office revenue declined 43% versus a pre-pandemic baseline. And while we expect 8% growth in 2023, this would still be an industry down 39% versus pre-pandemic levels, the analyst wrote in Evercore ISI Vijay Jayant in a note published on Sunday.
But you could finally sell to AMC Somebody? Patcher isn’t sure.
“AMC is a seller at a price, but who is a buyer?” question.
“The reality is, it’s a declining business, so there really isn’t a lot of opportunity for a financial buyer.”
Alexandra is a Senior Correspondent at Yahoo Finance. Follow her on Twitter aliecanal8193 and email it to [email protected]
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