New York (CNN Business)It wasn't long before some movie fans found the easiest and cheapest way to watch. It's not about that. The postblockbusterworld movie was to rent a DVD from a drugstore or other retailer's Redbox kiosk. Oh, early 2010s. But the rise of Netflix and other streaming services has almost killed the business.
But the Redbox is back. It has its ownstreaming operationbuilt. And even ifNetflix (NFLX)plunges, the company's share price is one of the hottest on Wall Street. .. The share of
Redboxhas increased by more than 20% this year, about 55% in the past month and about 200% in the last three months. This is in stark contrast to the 70% plunge of Netflix, the worst stock ofS&P 500. Disney (DIS)has its own proud Disney + streaming service, down 40%, Dow.
Other media companies that offer streaming services.ParamountGlobal, Owner of PeacockComcast (CMCSA)and CNN's parentWarnerBros. Discovery Thehas both HBO Max and Discovery + and plunged in 2022.
Currently, there are concerns that too many streamers are chasing too few customers. Apple(AAPL)andAmazon (AMZN)also has a streaming service. Disney also owns Hulu. Also, as recession concerns grow, consumers may be reducing non-essential monthly subscriptions.
So why is Redbox so prosperous? It's a little complicated.
Redbox was unveiled in October through a merger with Blankcheck's Special Purpose Acquisition Company (SPAC). The company was previously owned by the private equity giantApollo Global Management (APO). This made Redbox's parent company Outerwall private in 2016. Outerwall also owned thechange count kiosk Coinstar,another retail relic.
Redbox is currently planning to merge again. This time, weirdly named video-on-demand media companyChicken Soup for the Soul (CSSE), owner of Crackle streaming service .. Chicken Soup for the Soul purchased crackles fromSonyin 2020.
However, Redbox is also a target for shortsellers and investors (especially hedge funds) betting on stocks going down. As of the end of May, more than 30% of the company's available stock was in short supply, which was very large.
And, strangely enough, it's the interest from shorts that can help increase Redbox inventory.
Redbox seems to be a favorite of the crowd of Reddit meme stocks. These investors areGameStop (GME),AMC (AMC)And recentlybankruptcymakeup giantRevlon(REV). A quick glance at
RDBX subredditreveals that the company is backed by individual investors who are buying stock to "squeeze" their shorts. increase.
It is even more painful for sellers when there is a significant shortage of stocks. This is because short sellers borrow stock and sell it in the hope that it will be bought back at a low price before it is returned. They take the difference into their pockets as a profit. But as prices go up, shorts can lose a lot of money.
Some Reddit fans expect the price of Redbox to be significantly higher. There is even a mandatory reference to the Redbox as MOASS now --- the mother of all short squeeze. (The same acronym was also used to promote GameStop and AMC.)
The problem with short squeeze is that they rarely last long. Redbox is losing momentum right now.
Thursday's share price fell more than 10% to about $ 9, down about 40% from its recent high of just under $ 15 per share in mid-June. Redbox squeeze may have been fun while it was going on, but it's definitely. The company is not the following Netflix or Disney.