HomenewsHow to Evaluate Redbox Stock Based on Its Financial Statements

How to Evaluate Redbox Stock Based on Its Financial Statements

Whether you’re new to investing or have been at it for years, learning the basics can help you make smarter decisions. One way to do that is by evaluating companies based on their financial statements.

RDBX stock is up more than 260% in the past 10 trading days. That’s because the company has received shareholder approval for its merger with Chicken Soup for the Soul Entertainment Inc.

What is Redbox Entertainment Inc. (NASDAQ:RDBX)?

The company operates a network of physical kiosks for the rental or purchase of movies and TV content. The Company also offers transactional and ad-supported digital streaming services.

Redbox Entertainment serves a unique and loyal customer base with a focus on value (71 percent of customers self-identify as “Deal Hunters”), love of movies, and an average consumption of over two DVDs per night. This differentiated customer segment provides Redbox with a large, diverse, and engaged customer base that generates significant revenue from the Company’s digital business.

The Company’s physical kiosk business is positioned for significant recovery as movie theaters reopen and full content release schedules return to normal. This is expected to lead to growth in legacy revenue from both physical and digital channels.

What is Redbox Entertainment Inc.’s (RDBX) Business Model?

Redbox Entertainment (NASDAQ:RDBX) operates a self-serve kiosk network that provides consumers with access to new release DVDs and Blu-ray Discs. These kiosks are located at grocery stores, mass retailers, drugstores, dollar retailers, and convenience stores.

In addition, it operates a digital streaming service that offers ad-supported (AVOD), paid movies from Hollywood studios, hundreds of content partners, and over 145 free ad-supported streaming television channels (FAST). It also owns an original film production and distribution division.

However, Redbox’s business is in decline as it struggles to grow its streaming business and its rental kiosks become increasingly irrelevant. That’s why the stock plunged last year as investors grew skeptical about its ability to survive in this competitive space.

What is Redbox Entertainment Inc.’s (RDBX) Merger with Chicken Soup for the Soul Entertainment Inc. (NASDAQ:CSSE)?

RDBX stock was up more than 10% yesterday and continues to fall today, as the company has become a short squeeze target. This is a very bad move for investors who are looking to make long-term gains.

CSSE stock was up more than 15% in the first hour of trading on Monday, valuing its offer for Redbox at a whopping $0.82 per share. However, this is a short-squeeze play that will be quickly overtaken by more attractive opportunities.

The deal between Redbox and CSSE will create a leading independent, integrated direct-to-consumer media platform, delivering premium entertainment for value conscious consumers. The combined company will have scale across content production and distribution, with a massive content library, more than 38,000 kiosks nationwide, extensive digital capabilities in AVOD, TVOD, and FAST, and access to millions of targeted customers.

What is Redbox Entertainment Inc.’s (RDBX) Dividend Policy?

If you’re looking for a dividend stock with substance, you can’t go wrong with Redbox Entertainment Inc. (RDBX). The company is known for its wide array of physical media offerings, which include DVDs and Blu-ray discs. It also offers a digital streaming service. RDBX boasts a solid payout ratio of 65% and pays out an annualized dividend of $0.07 per share.

As you can see from the chart above, the company has a decent dividend yield of 1.45%, which is more than enough to offset the significant cost of ownership. However, the stock is hardly a value buy right now and may prove to be more of a fad than a sustainable dividend grower in the long run. Hence, you might want to think twice before adding to your portfolio or cashing in on that dividend.

What is Redbox Entertainment Inc.’s (RDBX) Stock Price?

Earlier Monday, shares of Redbox Entertainment (RDBX) gained as much as 23% in a single trading session. Despite the stock’s rally, it remains far from a bargain right now.

The company is under an offer from Chicken Soup for the Soul Entertainment (CSSE 1.29%) that values it at a whopping $0.82 per share. That implies that a full buyout is now priced at more than $5 per share.

Investors betting that this deal will go through are taking a huge gamble at current prices. This is a business that has shown large losses, cash burn, and a very weak balance sheet. Even if the merger does not go through, its shares will likely come down significantly from here.


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