Amazon Could Make Movie Theaters Its Next Victim

Imax stock is trading lower, as a result

Karee Venema
Aug 16, 2018 at 10:09 AM
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Movie theater stocks are feeling the heat today on reports Amazon.com, Inc. (NASDAQ:AMZN) is considering purchasing Landmark Theatres -- a California-based theater chain co-owned by Mark Cuban. While Imax (IMAX) is down 2% at the open, though, AMZN shares are trading up 0.9% at $1,899.51.

This positive price action for the FAANG stock just echoes its longer-term trajectory, with Amazon boasting a more than 92% year-over-year gain -- boosted by familiar support by its 40- and 80-day moving averages. In 2018 alone, AMZN shares have gained 61%, and topped out at a record high of $1,925 on Monday. Plus, yesterday's drop was neatly contained by the equity's 10-day moving average.

In spite of this impressive technical strength, there's plenty of skepticism being priced into the FAANG stock. Short sellers, for instance, have started to show signs of life, and increased their bearish positions by 9.5% in the latest reporting period. However the 4.57 million AMZN shares sold short is near historically low levels, and accounts for just 1.1% of the stock's available float.

Elsewhere, options traders have been growing more bearish on Amazon, with put open interest of 523,853 contracts docked at its highest perch in over a decade. While some of this activity could be due to shareholders protecting paper profits against any unexpected downside risk, it's a prime time to buy premium on AMZN options. In fact, the stock's Schaeffer's Volatility Index (SVI) of 26% ranks in the 26th annual percentile, meaning short-term options are pricing in low volatility expectations at the moment.

Separately, Amazon is also claiming victims in London trading today, too. Specifically shares of price comparison websites like Moneysupermarket.com and Gocompare.com are lower, after Reuters reported AMZN is looking into developing a similar site in the U.K., and is currently in talks with several European insurers.


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