How Redbox Once Again Became a Wall Street Sweetheart | CNN Business


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It was not so long ago when some movie fans found the easiest and cheapest way to watch movies in one post-Film The world had to rent DVDs from Redbox kiosks at drugstores and other retailers. Ah, early 2010. The rise of Netflix and other streaming services largely killed that business, however.

But Redbox is back. it’s made your own streaming operation, And the company’s stock is somewhat inexplicably one of the hottest on Wall Street, even as Netflix

(NFLX)
has fallen.

shares of redbox There has been an increase of more than 20% this year, about 55% in the last month and around 200% in the last three months. That’s the exact opposite of a 70% drop for Netflix, the worst stock in the world S&P 500, Disney

(dis)
who has his own wanted disney

(dis)
+ Streaming service, down 40%, making it the biggest dog in the world doe,

Other media companies with streaming services, including Paramount GlobalPeacock Boss Comcast

(CMCSA)
and CNN Guardian Warner Bros. DiscoveryIn which both HBO Max and Discovery+ have fallen sharply in 2022 as well.

Now the worrying thing is that there are too many streamers chasing very few subscribers. Apple

(AAPL)
and amazon

(AMZN)
There are also streaming services. Disney also has Hulu. And consumers can cut down on non-essential monthly subscriptions as recession fears rise.

So why is Redbox flourishing? It’s a bit complicated.

Redbox went public in October through a merger with Blank-Check Special Purpose Acquisition Company (SPAC). The company was previously owned by private equity giant Apollo Global Management.

(APO)
Which made Redbox’s parent company Outerwall private in 2016. The Outerwall was also owned by change-counting kiosk Coinstar, Another retail relic.

Redbox is now planning to merge again, this time with the oddly-named video-on-demand media company Chicken Soup for the Soul.

(CSSE)
, owner of the Crackle streaming service. chicken Soup for the Soul

(CSSE)
bought crackle from Sony in 2020.

But Redbox has also been the target of short sellers, investors (especially hedge funds) who bet that a stock will go down. More than 30% of the company’s available shares were being held short by the end of May, a huge amount.

And it’s the interest from the shorts, oddly enough, that could help lift Redbox stock.

It looks like the Redbox Reddit meme stock has become a crowd favorite, the investors who have helped promote GameStop.

(GME)
AMC

(AMC)
and, recently, bankrupt Makeup Giant Revlon

(REV)
,

a quick look at rdbx subreddit Shows that there the company is getting support from individual investors who are buying the stock to “squeeze” the shorts.

When a heavily short stock moves up, the short sellers inflict more pain. This is because short sellers borrow shares and then sell them with the hope of buying them back at a lower price before returning them. They pocket the difference in the form of profit. But if the price moves up, the shorts can lose a lot of money.

Some fans on Reddit are predicting wildly high prices for Redbox. There’s still a mandatory reference to Redbox as a moss—the mother of all miniature squeezes. (The same acronym was also used to refer to GameStop and AMC.)

The problem with short squeezes is that they rarely last long. Redbox is now rapidly losing momentum.

The stock fell more than 10% to nearly $9 on Thursday and is now down nearly 40% from its recent high of $15 per share in mid-June. The Redbox squeeze may have been fun, but make no mistake: The company isn’t the next Netflix or Disney.