The apes are going wild over potential news out of AMC Theaters (NYSE:AMC). Reports suggest that Amazon (NASDAQ:AMZN) may have an interest in picking up the theater chain itself. Investors sent AMC shares up over 11% in Tuesday afternoon’s trading as a result.
Current reports from “senior sources” noted that Jeff Bezos has pulled together investment advisers aplenty in order to run down the idea. If it goes through—which, of course, there is no assurance that will happen as yet—Amazon will use the theaters not only as theaters but also for other purposes.
One, Amazon will put Amazon Prime movies on theater screens. Two, theater real estate will become distribution hubs. Three, theater staff will cross-sell other Amazon services like grocery delivery, and of course, the huge amount of customer data from all those moviegoers will be Amazon’s to enjoy as well.
AMC is already regarded as a “distressed asset” by some analysts. Thus, the idea that Amazon could land all that real estate inexpensively is a clear possibility. In fact, some suggest that Bezos may simply wait a while longer and see if AMC doesn’t go bankrupt outright first, opening up the possibility of a fire sale in the making.
Analysts don’t have much faith in AMC’s chances. Currently, analyst consensus calls AMC stock a Moderate Sell, with two Holds and three Sell recommendations. Further, thanks to AMC stock’s average price target of $2.15, it offers a distressingly large 57.13% downside risk.
