On Tuesday, AMC Entertainment’s shares jumped as much as 20% after it was reported that Amazon was considering acquiring the struggling movie theatre chain.

According to sources familiar with the discussions, Jeff Bezos has ordered his investment advisers and top entertainment chiefs to explore acquisition plans for AMC. While AMC and Amazon have not commented on the report, the news has caused AMC’s shares to soar.

As movie theatres struggle to draw in crowds after lifting pandemic restrictions, rising costs have forced people to cut spending on out-of-home entertainment and focus more on groceries and rent. However, Amazon’s $8.5 billion acquisition of MGM last year shows that the online retailer is focused on beefing up its Prime Video streaming service amid intensifying competition.

Despite the report, some industry experts are sceptical of AMC’s inflated valuation and massive debt, which currently stands at $5.17 billion. Wedbush Securities has suggested that Amazon would be better off acquiring the United Kingdom’s Cineworld Group Plc, which filed for U.S. bankruptcy protection in September.

AMC’s shares have pared some gains, up 13% at 11 am this morning. At the peak of the Reddit-fueled surge in June 2021, AMC was valued at over $23 billion. However, the company’s current market value is about $2.4 billion.

If Amazon were to acquire AMC, it could use the movie theatres to promote its slate of Amazon Prime movies, cross-sell other Amazon services such as grocery delivery, and serve as a local distribution hub for Amazon products. This would enable Amazon to use AMC’s nearly 600 movie theatres across North America, Europe, and the Middle East as “marketing weigh stations,” according to an Amazon insider.