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AMC Entertainment Rose 50% on Amazon Buyout Talks

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Today at 7:52 AM ET, AMC Entertainment (NYSE:AMC) stock rose 50% to $6.08 in the pre-market session. The stock rose after reports that Amazon (NASDAQ:AMZN) is interested in buying the struggling movie cinema operator. Amazon stock fell 0.3% at the same time.

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AMC Entertainment stock up 50%

According to a report from TheStreet, “The two companies reportedly have held talks about a potential takeover of AMC by Amazon. However, it is not clear if the discussions are still active or if they will lead to a deal.” The report added, “An agreement, if it were to be consummated, would effectively give Amazon and specifically its growing Amazon Prime movies and entertainment service an outlet to stream content to mass audiences outside of their respective living rooms.”

Analysts’ expectations for Q1

Wall Street analysts expect AMC Entertainment to post sales of $981.5 million in the first quarter—a fall of 18.2% YoY (year-over-year) compared to $1.2 billion in the first quarter of 2019. Also, analysts expect the company to report a non-GAAP EPS of -$1.44 in the first quarter compared to -$1.25 in the same quarter last year.

Analysts also expect AMC Entertainment’s revenues to fall by 33.6% YoY in 2020 to $3.6 billion. The sales could rise by 44.4% YoY in 2021 to $5.3 billion. The adjusted earnings will likely fall to -$5.04 per share in 2020 from -$1.44 per share in 2019. However, the earnings could rise to -$0.95 per share in 2021.

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Analysts’ recommendations for AMC Entertainment

As of May 8, 13 analysts cover AMC Entertainment stock. Among the analysts, nine recommend a “hold,” four recommend a “sell,” and none recommend a “buy.” Analysts have an average target price of $3.20 on AMC Entertainment. The target price implies a return of -22% based on the closing price of $4.10 on May 8. The consensus target price for the stock has fallen from $4.14 in April—a fall of 22.7%.

Stock returns

On May 8, AMC Entertainment stock rose 2.8% and closed at $4.10 with a market cap of $427.4 million. The stock price has fallen 10.3% in the trailing five-day period, while it has fallen 43.4% year-to-date. Movie theaters have been closed amid the coronavirus pandemic.

Currently, AMC Entertainment stock is trading 70.2% below its 52-week high of $13.75 on May 13, 2019. The stock is also trading 110.3% above its 52-week low of $1.95 on April 13, 2020.

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On May 8, AMC Entertainment stock was trading 16.5% above its 20-day moving average of $3.52. Meanwhile, the stock is trading 14.8% above its 50-day moving average of $3.57 and 22.6% below its 100-day moving average of $5.30. The stock’s 14-day relative strength index score of 55 suggests that the stock isn’t overbought or oversold.

AMC Entertainment has an upper Bollinger Band level of $5.24. The company’s middle Bollinger Band level is $3.52, while its lower Bollinger Band level is $1.80. On May 8, the stock closed near its middle Bollinger Band level, which suggests that the stock isn’t oversold or overbought.

Amazon generated sales of $75.5 billion in the first quarter, which ended in March—a growth of 26.4% from the first quarter of 2019. The company beat analysts’ consensus revenue expectation of $73.6 billion. In the first quarter, Amazon reported a non-GAAP EPS of $5.01 compared to $7.09 in the first quarter of 2019. The earnings missed analysts’ consensus estimate of $6.25 per share. On a year-to-date basis, the stock has risen by 28.8% as of May 8. Read Should You Buy Amazon Stock on the Coronavirus Dip? and 3 Must-Knows for Amazon Stock Investors to learn more.

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