Amazon is reported to be acquiring MGM Studios for $ 9 billion. If a deal is closed this week, the company's stocks will surge rather strongly.
It will also be Amazon's largest acquisition since 2017, when it bought Whole Foods for $ 13.7 billion.
Amazon is said to be acquiring more television and film content in order to develop its new Prime Video service. Apparently, it will seriously compete with Netflix and Disney, as well as a number of other video streaming services.
As for MGM, it has long been looking for a buyer. It is known for having a very wide audience, and owns the rights to famous films and TV series such as Rocky, Legally Blonde, The Pink Panther and Stargate. It also owns Epix, a premium Pay TV service that has a value of $ 1.3 billion in 2017.
Going back to Amazon, it is among the favorites of hedge funds, hence, it was always in the top 10 last year. But in the first quarter of this year, shares slipped behind Facebook and Microsoft, even though the company posted a strong profit growth last quarter. Its earnings per share (EPS) was up 215% year-on-year, while revenue increased by more than 40%.
So why did Amazon's stocks dip this 1st quarter? Perhaps, investors no longer believe that the company will see significant jumps in the market, especially since the Federal Reserve is keeping a strong attitude to its monetary policy.
Investors are also looking at the energy, industrial and financial services sectors, which are more attractive after the imminent opening of the global economy.
Now, Amazon is inside a triangle, and only its deal with MGM will determine if its value will increase or not. In short, if a deal is made, then Amazon's stocks will climb beyond the upper limit of the triangle, heading towards 3300 and 3550. If not, its value will drop to 3185, and then plunge to 3070 and 2990.
