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Redbox sees stock price double over past week

Tim Baysinger
May 5, 2022
Data: YCharts; Chart: Axios Visuals
Data: YCharts; Chart: Axios Visuals

Redbox, the struggling DVD-rental kiosk company, has seen its stock price double to $7.38 over the past week.

Why it's the BFD: Redbox disclosed last week that it had secured $50 million in new funding, just as investor confidence is waning around streaming's long-term viability.

What's next: B. Riley Analyst Eric Wold argued in a May 3 note that Redbox should restart its own digital transition, writing that the new funding and the stock price bump "opens the door for [Redbox] to re-accelerate digital growth strategies that have been put on hold or delayed as management sought out additional liquidity options."

The big picture: Redbox has been hammered by both the pandemic — which largely wiped out theatrical releases for the better part of two years — and the consumer shift toward streaming.

  • The company had to cut around 150 jobs earlier this year, and its CFO Kavita Suthar stepped down just days before the new funding was disclosed.
  • But, largely driven by Netflix's disappointing earnings, investors have increasingly grown wary of the media industry's "all-in" approach to streaming.
  • In addition, the cadence of theatrical film releases appears to be returning to a version of pre-pandemic normal — and summer movie season is on the horizon.

Yes, but: Redbox may be up, but it's still nowhere near its 52-week high from last November of $17.90 a share.

What they're saying: "Although the launches of multiple streaming services in recent years have provided additional content viewing options for consumers, we remain confident in a demand rebound from the Redbox target demographic," Wold wrote. "We find it hard to believe that consumers that previously coveted physical rentals for <$2.00 per night would now be willing to either pay for movie theater tickets or subscribe to multiple studio streaming platforms to maintain access to the same movies."

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