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Shares of AMC Entertainment rocketed 47% in active pre-market trading today, as it was reported that Amazon is interested in acquiring the struggling movie theater chain.
In a bid created to give its growing agenda of small-screen content American multinational conglomerate technology company Amazon.com Inc (NASDAQ: AMZN) allegedly has negotiated about the possibility of taking over financially troubled AMC Entertainment Holdings Inc (NYSE: AMC).
AMC stocks were up more than 40% in at 10:04 am ET on Monday after the news about the potential deal was revealed. Now AMC stock is at $5.12 which shows a more than 24% growth. Meanwhile, AMZN stock is 1% up, at $2,403.71. It has run up 28.8% this year.
The two companies were allegedly talking regarding the potential takeover of AMC by Amazon. However, it is still not perfectly clear if the discussions are still actual or if two companies will manage to reach the deal.
Amazon and AMC: Streaming Outside Your Home
If it is to be accomplished, the agreement would effectively provide Amazon and especially its growing Amazon Prime movies and entertainment service, a sort of an outlet that is able to stream its content to wide audiences outside of their individual living rooms.
Amazon and Netflix Inc (NASDAQ: NFLX) have turmoiled the big movie industry from its traditional basis by offering subscriptions to let people watch original movies and TV shows both at home and on the go, completely ignoring the golden rule of releasing content on the “big screen” first.
As the COVID-19 pandemic is closing down theaters and every day we are witnessing more and more people streaming content straight forward, AMC and other movie theater chains have been stuck in deep mud on a financial level as they combat for their first-rights position to show content before everybody else.
AMC earlier this month came out swinging at Comcast Corporation (NASDAQ: CMCSA) owned Universal Pictures after Universal decided to ignore theaters and release its “Trolls: World Tour” animated movie directly to consumers as the pandemic rises and global lockdown is also enforced. The chain also with the chain adequately forbidding Universal from showing any of its releases in AMC-owned theaters.
Missed 1Q Earnings
Amazon, therefore, became the first streaming service to win the desired Oscar in 2017 for its movie ‘Manchester By The Sea,’ starring Casey Affleck and Michelle Williams. Amazon, however, missed the estimates for the first quarter. Its operating cash flow increased 16% to $39.7 billion for the trailing twelve months, compared with $34.4 billion for the trailing twelve months ended March 31, 2019.
Free cash flow increased to $24.3 billion for the trailing twelve months, compared with $23.0 billion for the trailing twelve months ended March 31, 2019. Net sales increased by 26% to $75.5 billion in the first quarter, compared with $59.7 billion in first-quarter 2019. Excluding the $387 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 27% compared with first-quarter 2019. Operating income decreased to $4.0 billion in the first quarter, compared with an operating income of $4.4 billion in first-quarter 2019.
Net income decreased to $2.5 billion in the first quarter, or $5.01 per diluted share, compared with net income of $3.6 billion, or $7.09 per diluted share, in first-quarter 2019.