AMC (AMC) stock closed Wednesday's trading session down nearly 3% after surging on Tuesday following a report from The Intersect which claimed tech giant Amazon (AMZN) is interested in acquiring the embattled theater chain.
The report, which cited "multiple senior sources familiar with the discussions," said Amazon founder Jeff Bezos is exploring plans to purchase AMC in order to use its 600+ theaters to promote Amazon Prime movies and cross-sell services like grocery delivery. AMC CEO Adam Aron declined to comment to Yahoo Finance.
However, not everyone is convinced of a deal like this coming to pass, with Wedbush analysts Alicia Reese and Michael Pachter writing in a new note: "Amazon would be better off buying a piece of Cineworld," which filed for bankruptcy in September 2022.
"Amazon could buy 1,000 screens for $200,000 a screen, or $200 million. Why would Amazon instead choose to buy 10,000 screens for $8 billion?" the analysts wrote, referencing AMC's heavy debt load of $4.6 billion, in addition to the stock's inflated valuation.
"The bottom line is that Amazon has no interest in being in the theatrical exhibition space to make money," the note added.
"It just makes no sense whatsoever that someone would buy AMC and take over their debt instead of buying Cineworld out of bankruptcy," Pachter told Yahoo Finance Live on Wednesday.
"There's no point in Amazon buying a company that has debt," he continued. "This is an idiotic concept. I would downgrade Amazon if they did something as stupid as buying AMC. That [would] show [Amazon CEO] Andy Jassy has no idea what he's doing."
Ultimately, Pachter said he doesn't see Amazon acquiring Cineworld, either, explaining the move would not make strategic sense for the company.
"The biggest acquisition [Amazon] ever made was Whole Foods. That was a $4 to $5 billion revenue company and Amazon strategically needed to get into home grocery delivery. This doesn't make sense," he said.
Tuesday's report also comes at a time when tech giants have been heavily investing in entertainment, despite cutting costs in other areas.
Last week, Bloomberg reported Apple plans to spend $1 billion a year to produce movies that will be released in theaters. Similarly, Amazon formulated plans to invest $1 billion to produce 12-15 movies a year exclusively for theaters, Bloomberg reported in November. Amazon closed its $8.5 billion deal to acquire MGM early last year.
Theaters, still reeling from the pandemic, have yet to see ticket sales bounce back to pre-pandemic levels — despite blockbuster showings from films like "Avatar: The Way of Water," "Creed III," and "John Wick: Chapter 3."
"Across the top 5 studios, 2022 global box office receipts were down 43% vs. the pre-pandemic baseline. While we are expecting 8% growth in 2023, this would still place the industry down 39% vs. pre-pandemic levels," Evercore ISI analyst Vijay Jayant wrote in a note published on Sunday.
But could AMC eventually sell to someone? Pachter isn't so sure.
"AMC's a seller at some price, but who is the buyer?" he questioned.
"The fact is it's a declining business, so there's not really that much opportunity for a financial buyer."
Alexandra is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
Related Quotes
New mansion tax law will 'chase people out of LA': Million Dollar Listing's Josh Altman
The company today says it has 14 million active users, but almost consistently for the last decade, its financial position has been in a slow decline — with stagnation in its core business model, little success in efforts to diversify, declining revenues and ongoing losses. The Chicago-based company, which today has a market cap of just $103 million (a drop of 99.4% from its public market debut), has appointed Dusan Senkypl, a current board member, as interim CEO. Before Groupon, Deshpande was an exec at Zappos for more than a decade, and after he took the Groupon job, he continued to be based out of Las Vegas.
Bob Michele, the chief investment officer of JPMorgan Asset Management, has warned of an economic downturn, saying that markets are headed for a rally before an inevitable slowdown. In an interview with Bloomberg on Friday, Michele says risk assets will rise in the next quarter as they did during the Great Recession. "In the next quarter, we could see risk assets rally. You could have a feel-good period, and then the reality catches up," Michele said. "If we've been taught anything this month, y
(Bloomberg) — Lincoln Power LLC, the owner of two Illinois power plants, filed for bankruptcy after its financial strain was exacerbated by nearly $39 million in penalties levied by the biggest US electric-grid operator. Most Read from BloombergTrump Weighs Bid to Shift NY Criminal Case to Staten IslandVeteran Money Managers Bail on Stock Rally With Fed Hawks FlyingParents Are Paying Consultants $750,000 to Get Kids Into Ivy League SchoolsGlobal Food Supply Risks Rise as Key Traders Leave Russi
One thing is certain in the stock markets lately: their inherent uncertainty is taking charge, and high volatility is here to stay. For months, investors and economists have worried about the recessionary effects of the Federal Reserve’s anti-inflationary interest rate hikes – but the recent bank crisis has added another layer of concern to an already tumultuous situation. Now, we’re dealing with the fallout from that crisis, and inflation and interest rates both remain high. It’s a textbook cas
(Bloomberg) — Charles Schwab Corp.’s worst month in more than 35 years has sparked a debate among analysts as to whether the brokerage giant has been unfairly punished by investors amid growing fears about the US banking sector.Most Read from BloombergTrump Weighs Bid to Shift NY Criminal Case to Staten IslandVeteran Money Managers Bail on Stock Rally With Fed Hawks FlyingParents Are Paying Consultants $750,000 to Get Kids Into Ivy League SchoolsGlobal Food Supply Risks Rise as Key Traders Leav
The average U.S. home sales price hit $535,800 in 2022. We asked experts how much you need to earn to afford a home around that price point.
Even though the Federal Reserve might have started bending the inflation curve, Mick Mulvaney and Anton Schutz warn the central bank is ignoring "the real problem out there."
An annuity can be an appealing option to build your retirement nest egg. Adding guaranteed retirement income to your retirement can give you financial stability. But the exact amount that you'll get from an annuity each month will vary. Let's … Continue reading → The post How Much Does a $200,000 Annuity Pay Per Month? appeared first on SmartAsset Blog.
The sum of $10 million might sound like a lot – and to the average person, it is. But what if you want to retire at just 30 years old and potentially live another 40, 50 or even 60 years … Continue reading → The post Is $10 million Enough to Retire at 30? appeared first on SmartAsset Blog.
The biggest cigarette company in the U.S. acknowledges that it has to move toward smokeless products. But to hold its shareholder base, it also knows it has to grow an already rich dividend.
Treasuries aren't the only refuge in a slowdown. Dividend names also "can provide a margin of safety," says UBS.
Check out the CDs that made our top 10 list based on their APY, minimum opening deposit, compounding frequency, and customer service.
(Bloomberg) — A case of mistaken identity is sparking a selloff in Republic First Bancorp Inc., which had fallen by more than 40% this month because investors have it confused with embattled First Republic Bank.Most Read from BloombergTrump Weighs Bid to Shift NY Criminal Case to Staten IslandVeteran Money Managers Bail on Stock Rally With Fed Hawks FlyingParents Are Paying Consultants $750,000 to Get Kids Into Ivy League SchoolsGlobal Food Supply Risks Rise as Key Traders Leave RussiaPutin Sig
People are rushing into money-market funds. Total assets held in money-market funds, which are investment vehicles that buy cash-like securities such as short-term Treasury bills, recently reached close to $5.5 trillion, according to RBC. Earlier this year, money-market fund assets stood at roughly $4.5 trillion, a level at which people stopped pouring more money into those funds a few times in the past few years, opting instead to buy other assets like stocks.
Investors enjoyed a small S&P 500 rally in March. But there were much more lucrative places to put money in the month.
With a yield of 9.62%, the recently expired Series I bond was understandably popular. With interest rates rising, bond funds are down this year and banks continue to offer miserly rates on deposit accounts. So it's no wonder that a … Continue reading → The post It Pays to Procrastinate: The New 6.89% I bonds Will Beat the Old 9.62% Bonds in Just 4 Years appeared first on SmartAsset Blog.
The Dow Jones rose Friday after key inflation data, with the release of the PCE price index, the Fed's preferred measure of inflation.
The market rally is building momentum with more stocks flashing buy signals. Tesla deliveries are due as EV rivals report Q1 sales.
The Charles Schwab Corporation (SCHW) closed the most recent trading day at $52.38, moving -0.17% from the previous trading session.
