AMC Theatres’ stock surges amid Amazon purchase rumors

Last Updated on August 5, 2021

Both companies are staying mum on the subject but rumors are swirling that Amazon may be interested in buying the troubled AMC Theatre movie chain and this speculation saw AMC's stock surge in the process.

According to "The Daily Mail", via "Variety", AMC has been in talks with Amazon about a potential takeover of the business in the wake of the COVID-19 pandemic. When AMC Theatres shuttered its doors back in March, the nation's largest theater chain quickly made news when it was revealed that the company may not survive the shutdown because of massive debt amassed even before the pandemic. Chapter 11 bankruptcy was brought up as an option to save AMC while the company began to shift tones and say they would be ok through July and could be relatively fine when theaters prepare to reopen. There has been a rebound in share price, even before the Amazon speculation, and this could allow Amazon to grab AMC for a cheap rate since AMC's shares and debt are both trading at steep discounts to pre-pandemic levels.

AMC's market cap has been bouncing around $400 million as its theaters closed around the world when the virus began to spread. AMC was bought by Chinese Dalian Wanda group in 2012 for $2.6 billion, but later bought back $600 million of its own shares in 2018 when Beijing limited ownership in foreign companies by Chinese entities. To avoid falling into bankruptcy this summer, AMC recently raised a very costly $500 million debt round to provide liquidity through the fall. With every move, it feels like they're holding on by a thread and this rumor about Amazon is another lifeline that could keep them alive. Look at it this way, for much of 2020, AMC’s stock has been down around 50% on the year as most of the company’s 11,000 screens around the world remain shuttered and the mere thought of Amazon buying the company has seen their shares up 40% (recouping about 26% of their value lost since January).

"The Daily Mail" report does say that talks could've already soured and with neither company commenting on the matter, all we have is speculation at this point. Hypothetically, however, acquiring AMC for Amazon would instantly give it a direct, global theatrical distribution pipeline for its own original films. The company previously explored purchasing the smaller cinema chain, Landmark Theatres, before it was outbid by Cohen Media Group. 

The crazy thing about the current state of affairs is that speculation like this can grow legs because things are so uncertain right now due to the pandemic and its impact on the industry. If there were no COVID-19 would Universal and AMC Theatres be going at it over theatrical and PVOD release windows and would we be questioning the overall survival of AMC Theatres? True, they accumulated debt long before the pandemic but a lot of this could've flown under the radar had they not been forced to close their doors and lose incoming business. Amazon stepping in to purchase AMC Theatres isn't all that far-fetched, especially with how crazy 2020 has been thus far.

Do YOU think this purchase could happen? Would it be a good move?