AMC Entertainment Holdings Inc AMC Is allegedly in the crosshairs of Amazon.com Inc AMZNas the e-commerce giant has long sought a theater chain to boost the prestige of its films.
It’s looking at the wrong company, according to one analyst.
“Amazon doesn’t need 10,000 screens to get into the theater business,” says Wedbush analyst Alicia Reese. In fact, Amazon would be “better off buying a piece of Cineworld,” she added.
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Remember how cinema world CNNWQRegal’s UK parent company, went bankrupt in September 2022.
Amazon could probably acquire any of Cineworld’s theaters for as little as $200,000, argues Wedbush.
That’s 1,000 screens for a total of $200 million.
“Why would Amazon buy 10,000 screens for $8 billion instead?” asks Reese. “The bottom line is that Amazon has no interest in monetizing the cinema exhibition space. Strategically they might want a place to show their own films, but 1,000 screens is a lot and 200 is probably enough.”
Amazon founder and former CEO jeff bezos recently told investment advisers to look into a possible takeover of AMC. If the company owns cinemas, it can showcase Prime movies and other Amazon services.
If Seattle-based Amazon were to sign a deal with Cineworld, it would certainly hurt AMC, whose CEO, Adam Aaron, recently stressed the importance of raising cash and reducing debt to the company’s survival. Based in Leawood, Kansas burned by $830 million in cash in 2022 and reported negative free cash flow of $105 million in the fourth quarter.
AMC Price Action: AMC shares are down 3.41% on Wednesday afternoon at $4.96 at the time of writing Gasoline Pro.
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