AMC Entertainment jumped 21% on Tuesday after a report suggested Amazon could buy the struggling movie theater chain. The Intersect reported that Amazon Chairman Jeff Bezos instructed his investment advisers to “explore acquisition plans” for AMC. AMC has been on a roller coaster ride since becoming a target for meme-stock traders in 2020. Something is loading.
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AMC Entertainment climbed 21% on Tuesday after a report from The Intersect said Amazon was considering acquiring the struggling movie theater chain.
AMC Entertainment shares were already up about 5% on Tuesday afternoon, but those gains were boosted after the Intersect report came out.
According to the report, Amazon founder and chairman Jeff Bezos instructed his investment advisers to “explore acquisition plans” for AMC and its 600 theaters. The report cites several high-level sources familiar with the talks.
“The idea is that Amazon can use AMC’s nearly 600 movie theaters in North America, Europe and the Middle East as ‘marketing weigh stations,'” the report said, citing an insider. Amazon.
Amazon could essentially use AMC’s theaters as a way to promote its Amazon Prime movie slate, sell other Amazon services like grocery delivery, as well as serve as a local distribution center for Amazon products.
Amazon used a similar strategy when acquiring Whole Foods in 2017.
A potential acquisition would end a tumultuous period for AMC Entertainment, which has had a rollercoaster ride over the past two years by becoming the target of stock investors even on Reddit and other forums. AMC shares hit an all-time high of nearly $73 in June 2021, but have since fallen more than 90% to $5.29.
Amazon would be able to help AMC pay off its multibillion-dollar debt, which is critical given that the theater chain is unprofitable as the film’s box office has yet to hit its peak of 2018 of almost 12 billion dollars. In 2022, total US box office receipts were just under $7.4 billion.
AMC CEO Adam Aron responded to the Intersect in a text message late Monday night with “we do not respond to rumors and speculation.”
The Intersect is a newsletter published on Substack that was started about two months ago by journalist Joe Bel Bruno.