Back in the early days of the pandemic, meme stocks were all the rage, and the two stocks most frequently affiliated with the meme-stock phenomenon were GameStop and AMC Theatres. Both have seen their share prices plummet since their pandemic highs. However, in the last week, both stocks have also seen their share prices pop again.
GameStop’s stock surged after it reported its first quarterly profit in two years. And yesterday, AMC stock also surged—but for a very different reason. Here’s what you need to know.
What’s happened?
Shares of AMC Entertainment Holdings, the company that owns the AMC movie theater chain, have surged over the past 24 hours. Yesterday, AMC shares ended up over 13% to $5.15 per share. And, at the time of this writing, AMC shares have been up as much as another 1.2% in pre-market trading this morning.
Why are AMC shares suddenly surging?
You can thank a report from The Intersect, which claims that Amazon has held talks about buying the movie theater chain, though no offer has yet been made to AMC. The exploratory talks have reportedly been ordered by Jeff Bezos himself, according to “multiple senior sources” who spoke to The Intersect.
What could Amazon possibly want with AMC?
The company reportedly thinks it can use AMC’s hundreds of theaters across America as “marketing [way] stations”—presumably, points where the public congregates that Amazon can then use to promote and cross-sell its other products and services, such as Amazon Prime Video, grocery delivery, and more. The report also says Amazon could use AMC theaters as “local distribution hubs” and, of course, as data collection points.
But isn’t Amazon is in cost-cutting mode?
Amazon has cut tens of thousands of jobs in recent months. However, former Amazon CEO Bezos, who is now the company’s executive chairman, is never one to pass on a deal to be had. AMC is in an incredibly financially distressed position. The theater chain has struggled ever since the pandemic destroyed audience foot traffic.
With its stock price at near historic lows, AMC is now worth just $2.6 billion. (By contrast, Amazon spent almost $14 billion on Whole Foods back in 2017.) The Intersect also notes that while internal talks have been had, Amazon has made no offer to AMC yet. The Intersect postulates that the retail giant may bide its time, waiting for AMC stock to drop further—or for the theater chain to even go into bankruptcy—and then scoop it up at a fraction of its current value.
Could Amazon offer an AMC subscription as a Prime benefit?
Movie theater subscription services haven’t turned out well in the past—but if anyone could pull it off it would be Amazon. A former Amazon exec told The Intersect that he could see Amazon offering some sort of AMC subscription to Prime members. Though this is just conjecture, one could imagine a scenario in which Amazon offers a set number of monthly theater tickets as a benefit for Prime subscribers.
What do AMC and Amazon say about these rumors?
AMC CEO Adam Aron told The Intersect “we do not reply to rumors and speculation.” As far as we know, Amazon hasn’t responded to the report. Fast Company has reached out to both AMC and Amazon for comment. We’ll update this post if we hear back.
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