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AMC stock jumps following Substack report on potential Amazon deal

Yahoo Finance Live checks out AMC shares amid reports that Amazon is considering purchasing the theater chain.

Video transcript

SEANA SMITH: All right, AMC shares are rising on a report that Amazon is exploring a deal to buy the theater chain. Now Intersect Substack author Joe Bel Bruno writing that Amazon founder Jeff Bezos has enlisted investment advisors and top entertainment chiefs to, quote, "explore acquisition plans."

Bel Bruno's sources say that Amazon would use AMC theaters to highlight Prime Video movies and also utilize the real estate beyond showing movies. Now, the report indicating that Amazon could potentially use some of AMC's space for its grocery delivery division and create more distribution hubs. Another motive could also be data and the access that Amazon would then have to the millions of moviegoers.

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DAVE BRIGGS: The report cites one former Amazon executive saying the e-commerce giant has been pursuing a theater acquisition since launching Prime Video in 2006. AMC could be attractive for Amazon, given the theater's recent track record and declining stock price. AMC, which once traded at higher than 50 bucks a share amid the meme stock craze, is now just above $5 per share with a market cap of $2.7 billion. Yahoo Finance reached out to both AMC and Amazon for comment on the story, but haven't received a response as of 3:00 PM this afternoon.

This sure is juicy. I think we could talk about this quite a bit. It's referenced as the 600 theaters being marketing way stations in this report, and it comes amid Amazon spending a billion dollars to get into movies, 12 to 15 a year, Apple getting into movies, around a billion dollars a year. And then you pile on top of that Amazon's first major release-- tomorrow, by the way-- the Nike biopic "Air." There is so much to the story that makes a lot of sense if you're Amazon and you have around $70 billion cash on hand. $2.7 billion-- that's a heck of a media buy, 600 theaters. You don't like it. I like that. So let's get into it.

SEANA SMITH: I just have lots of questions. I have lots of questions just about this report because, yes, I think that you can make the case as to why Amazon might be interested. But just in terms of the price right now, why not let it fall further, which is also something that this Substack writer did point out, just in case the fact that, hey, Bezos, if he was interested in this, could wait for the share price to come back down. Obviously, shares taking off on this report.

AMC is in a tough space. Obviously, I think it's a clear win for AMC just in terms of the fact that the company has struggled. Really the only thing that has shown any life to its stock price has been the involvement in the meme trade. We know people are not returning to movie theaters at the rate that we were nearly expecting them to post-COVID. Amazon, though, that would be a heck of a lot of real estate. And I think you also have to ask whether or not they need that, though, at this point.

DAVE BRIGGS: Our producers are going to kill us, but I'm going to add one more note.

SEANA SMITH: Yes, go ahead.

DAVE BRIGGS: Theaters cannot be converted. Almost entirely, they cannot because the slant concrete floor-- I've talked to many real estate executives around the country-- it is almost impossible to do away with that. It is a massive cost. So you can't just turn it into an Amazon distribution center or grocery chain. You know what I'm saying? That--

SEANA SMITH: Yeah.

DAVE BRIGGS: --slanted concrete floor.

SEANA SMITH: Which makes it-- AMC doesn't need $600 million, yeah.

DAVE BRIGGS: It sounds minor. It's actually major when it comes to development. Good story. We could talk about it for the next two hours.