Another twist has risen in AMC Theatres’ battle to stay afloat as reports surfaced of Amazon exploring a potential purchase of the multinational theater chain, resulting in a substantial bump in AMC’s stock price.
On Monday, business newsletter Intersect reported that Amazon was weighing the possibility of adding AMC to its portfolio. The chain’s more than 600 theaters in the U.S., Europe and Middle East could be used as part of the company’s campaign to expand the theatrical footprint of Amazon Studios, which is set to release more films like Ben Affleck’s “Air” as full theatrical releases as well as films from the recently acquired MGM like “Creed III.”
Following the report’s publication, AMC’s stock saw an 18% increase before closing up 13% to $5.15. The stock has plummeted from its meme stock highs in 2021 and is down 82% from a year ago. While increased box office revenue in 2023, driven by more frequent theatrical releases, is expected to improve the bottom line of AMC and other chains, investment firm Wedbush Securities projects that AMC will not report quarterly profits until 2024 even has it has enough cash flow to remain operational through this year.
According to senior Amazon executives who spoke to Intersect, AMC would give Amazon a major cinema network to release potential awards contenders and promote other Amazon products as well as provide access to consumer data from hundreds of millions of moviegoers.
But Wedbush analyst Alicia Reese believes that it is unlikely that an Amazon/AMC acquisition would actually happen, and believes that if Amazon is considering buying a theater chain, it “would be better off” acquiring Cineworld, the parent company of Regal Cinemas, which is currently going through bankruptcy proceedings.
“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?” Reese wrote. “With the Cineworld bankruptcy, Amazon can probably cherry-pick screens for $200,000 and the creditors will grab an offer like that. So Bezos’ investment advisers couldn’t possibly say ‘buy AMC for $8 billion’ when he can buy selected screens for $200 million or less.”
AMC, meanwhile, is pushing forward with different ways to find revenue outside of ticket sales. The chain has launched a new line of at-home popcorn available at Walmart and has recently performed a reverse stock split and converted its preferred shares into common shares to increase revenue. Its stock, meanwhile, is still championed by meme stock traders who sent the stock skyrocketing to an all-time high price of $59 in 2021.
“Those new retail investors turned out to be the saviors of our company. Their passion for AMC saved our company as they provide us with the cash resources we needed to survive,” Aron said during the chain’s most recent earnings call. “Avoiding a dire fate is a commitment that I personally made to our shareholders in the earliest days of this global pandemic when our revenues went to zero overnight and stayed there for months. I remain steadfast in that commitment to you today. Every action that AMC has taken is in direct support of that commitment.”
AMC declined TheWrap’s request for comment.