AMC Stock Alert: Why Wedbush Says an Amazon Buyout Isn’t Likely


  • A report stated that Amazon (AMZN) might buy AMC (AMC), sending AMC stock up 13% yesterday.
  • Investment bank Wedbush believes that such a deal is very unlikely to materialize.
  • AMC’s valuation is excessive, while AMZN could get theaters much cheaper from another source, Wedbush explained.
AMC stock - AMC Stock Alert: Why Wedbush Says an Amazon Buyout Isn’t Likely

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Amazon (NASDAQ:AMZN) probably will not buy movie-theater chain AMC (NYSE:AMC), investment bank Wedbush wrote in a note to investors today. Yesterday AMC stock rallied 13% based on a report that AMZN is looking to buy the theater owner. The report was published by a website called The Intersect, which cited an unnamed “Amazon insider” as the source for the story.

Why Wedbush Threw Cold Water on the Report

It s “extremely unlikely” that Amazon will buy AMC because of the chain’s massive $4.6 billion debt load and AMC’s excessive valuation, Wedbush wrote, according to Seeking Alpha. After yesterday’s rally, AMC’s market capitalization stood at $2.64 billion.

Moreover, after one of AMC’s large competitors, Cineworld (OTCMKTS:CNNWQ), went bankrupt, Amazon could probably acquire each Cineworld theater from the latter firm’s creditors for only $200,000 each, Wedbush contended.

Alternatively, Amazon could acquire all the theaters it wants for “$200 million or less.”

More About the Initial Report

Former Amazon CEO Jeff Bezos allegedly wants the e-commerce and cloud giant to buy AMC to market Amazon Prime’s original films and for “cross-selling services such as grocery delivery,” The Intercept reported.

AMC’s theaters could also become “local distribution hubs” and provide Amazon with customer data.

Background on AMC and AMC Stock

On Feb. 28, AMC stated that in 2022, it had begun “a multi-year glide path to recovery.” The company noted that it had posted better financial results in 2022 than in any year since 2019, as its top line jumped 54% last year versus 2021, while its EBITDA, excluding certain items, climbed over $338 million.

“We expect the recovery will continue apace in 2023, as Hollywood is expected to release approximately 75% more major movie titles than it did in 2022,” AMC stated.

Nevertheless, AMC stock is still down 58% over the last year, although it has risen 26.5% so far in 2023.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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