Overlooked Alpha launched April 2022 - subscribe at overlookedalpha.com. With all due respect to my fellow author, the post here on Seeking Alpha offers little in the way of analysis, and zero justification for the $50 target. It correctly points out that B. Riley has put at $35 price target on Redbox stock, while also citing a content deal with Fremantle covering little more than Baywatch and old Price Is Right episodes. The problem from the short side, however, is precisely that there's nothing in this rally or the last one that suggests any fundamental case. We're getting it much earlier than when it shows up on streaming. So far, the performance of the digital business isn't impressive. From my perspective, unless Redbox does something quite radical, the company will be gone by 2025if not sooner. Market Intelligence We also expanded what we call our services business. In fact, they promised year-over-year growth in 2023. I think that's what's really unique about Redbox is we're known for providing the very best value in entertainment. Yaghoobzadeh: Management grew the business by 4.5 times. Consumers are looking for alternatives to what they normally watch, and we're giving them a linear option as well. Fast fashion retailer H&M plans to close 350 stores in 2021 and open 100, for a net loss of 250 stores. As a brand synonymous with new-release movies and one of the largest operators of self-serve kiosks, Redbox recognizes the need to adapt to changing consumer leisure habits. Sorry, The Accountant is not available on American Netflix, but you can unlock it right now in the USA and start watching! Quick Answer: Things to do at work when bored? The move prompted an exodus of some 800,000 members. The Radio Shack website currently shows hundreds of store locations on a US map. Other retailers that didn't closefiled for bankruptcy, including J Crew, Nieman Marcus, and JCPenney. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Redbox Automated Retail LLC, which is in the process of going public via a reverse merger with special purpose acquisition company Seaport Global Acquisition The subprime mortgages made by GMAC thrust the company into financial trouble from 2008 to 2010, and it relied on $17.2 billion in government bailout money to keep its doors open. After the deal closes, Redbox expects to have approximately $209 million in cash that will be used to pay down existing debt and fund digital expansion, content acquisition and marketing initiatives. It's more expensive for us to provide that, and as a result, we have to charge a premium to the consumer. Owner Ascena Retail Group, which also owns Ann Taylor and Loft, announced plans to close the remaining 200 Justice stores. Check out these makeovers where companies ended up shooting themselves in the foot. TVOD is already led by Comcast (CMCSA) unit Fandango after its acquisition of Vudu, and by Redbox's own numbers TVOD is a market that is not expected to grow: Source: Redbox Analyst Meeting presentation. The percentage of Americans without internet is still making new lows, suggesting digital alternatives will eventually reach the small portion of consumers they haven't already affected. Redbox, the company best known for its movie vending machines, is officially ditching its video game rental and sales business. WebRedbox is still the cheapest way to rent a new release movie, by a huge margin. They launched an on-demand digital service in 2017 and more recently added free live TV and ad-supported content. It didnt take long for America to fall in love with a hamburger restaurant with a grinning clown jack-in-the-box presiding over the drive-thru. There is less reason for a middle man (either a theater or rental company) if they can sell their content directly to consumers on the internet. As of April 2023, the U.S. national debt has reached a record high of more than $31.5 trillion. By clicking the 'Subscribe Now' button, you agree to our Terms of Use and Privacy Policy. There's nothing in this rally or the last one that suggests any fundamental case for the stock. Then we released it at a lower-priced [transactional video on demand or pay-per-view], and then also in the kiosk. At that point, the float begins to expand, and a short trade in RDBX starts to look awfully attractive. Redbox has pointed to the size of its existing customer base - 39 million loyalty members, 46 million email subscribers - as a significant advantage for marketing. Starbucks is leaving some US malls to invest in drive-thru and pickup store formats. There was an unknown error. Here are the 30 best new movies at Redbox: Coming to the Box and On Demand in March 2020, Many Redbox kiosks have DVDs available for rent for $1.75 per day, plus tax (except for jurisdictions that do not require sales tax to be charged or collected), so if you keep that DVD for the one-day minimum rental period and return it two days later by 9:00 p.m. local time, you will be charged $5.25 plus applicable. With an oversize ball-shaped head and rapier wit, Jack lured customers back to enjoy the adult-themed menu. This is another name that (presumably) retail traders have found. Particularly after a major glitch during a server migration resulted in the loss of any and all music uploaded prior to 2015. In 2018, a dispute between PBR and its brewer, MillerCoors threatened to put Pabst out of business. I don't see us as competing with Netflix, I see us a complementary to Netflix because we can help get their customers get theses new movies that aren't available on Netflix. Almost five years have passed since the launch of Redbox on-demand and two years for free live TV. I have no business relationship with any company whose stock is mentioned in this article. Follow Along: 31 Days of Living Richer. When we started to use digital products, it caused more people to go to the kiosk. A:We do offer it on certain movies. Fox News has ousted Tucker Carlson less than a week after settling a lawsuit over the networks 2020 election reporting. Retailers have announced plans to close more than 1000 stores this year, and experts say the total could reach 10,000 stores or more. And so Redbox is trying to bring those customers from the DVD business to the new digital operations: Here's how Chief Strategy & Digital Officer Jason Kwong put it in May: Our vision and goal is to build a multi-product digital ecosystem that gives our customers the greatest choice. A: We don't set goals any more for a kiosk count. Digital adjusted EBITDA will be about $3M in 2021. The 5% decrease in kiosks is not massive, but hints that management might not expect revenue to recover to a pre-pandemic level. New Hampshire Gov. Redbox CEO Galen Smith sees a big future for home entertainment as consumers become more engaged with self service. Joel Andersonand Jordan Rosenfeld contributed to the reporting for this article. Accessories retailer Fossil is closing at least 65 stores after decreased sales in 2020, BisNow reported. The Lighthouse. It's (usually) new releases that drive consumers to Redbox kiosks, and without those enticements revenue unsurprisingly fell. Contacts Is Redbox going out of business? The company is coming back to the public markets in a SPAC merger. Redbox had adjusted EBITDA of $114 million in fiscal 2020 and is guiding for adjusted EBITDA of $101 million in fiscal 2021. Many people set resolutions for the new year with the goal of becoming better versions of themselves. Please. Redbox's former owner, private equity giant Apollo Global (APO), has plenty of experience with traditional initial public offerings. Do you think the big leap in streaming consumption during the pandemic was a high water mark that will recede in the near term? Yaghoobzadeh: Management grew the business by 4.5 times. OAKBROOK TERRACE, Ill., July 15, 2021 /PRNewswire/ -- Redbox, America's destination for affordable new-release movies and entertainment, held an overview They're getting the latest new releases there. Entering text into the input field will update the search result below, were once the low-cost competition to video rental stores like Blockbuster, adding. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). esgSubNav, Discover more about S&P Globals offerings, Global Credit and Risk Symposium: Unlocking Possibilities, JW Marriott Sao Paulo Av. RDBX stock looks overvalued, but in this environment, betting against it seems unwise - at least for now. The Company generated $114 million of Adjusted EBITDA in 2020, despite limited new theatrical content and lockdowns stemming from the COVID-19 pandemic. But the SPAC route actually makes more sense given the story Redbox is trying to tell. Redbox operates via automated retailed kiosks at thousands of locations across the US such as convenience stores, fast food restaurants, grocery stores, mass retailers, and pharmacies. That doesn't seem to be the case for Redbox, whose profit margin fell and went negative as revenue decreased. Theyve also dropped ShoeSource from their name. You can click on the 'unsubscribe' link in the email at anytime. It's been a great thing to be able to lift all boats as we introduce these products to the marketplace. From my perspective, unless Redbox does something quite radical, the company will be gone by 2025if not sooner. Disney also acknowledged that this change would lead to layoffs but declined to say how many people will be impacted. The company targeting increasing the output of Redbox Entertainment originals to more than 36 new releases per year. Spies In Disguise 3/10. More concerning is the fact that the digital business fell off the table. Since 1844, Pabst Blue Ribbon beer has been an inexpensive favorite brew in the U.S. As sales slid in the 1980s, the company changed owners several times. The network expanded to include action movies, reality shows and even professional wrestling, losing more fans along the way. A PIPE of $50 million includes investments by media companies Screenvision, Thunder Road, Legendary Entertainment and Lions Gate Entertainment LGFA LGFB. Dark Waters 3/3. The problem for Redbox is that the reasons to use their service are going away. Each of our kiosks now has an EMV reader so we can do chip and pin, but also mobile payment, making it easier for the consumer to use the kiosk. While the website CancelledSciFi.com has its doubts about SyFys ability to persist with declining views and canceled shows, Deadline reports that the SyFy channel has continued to order new shows, so it may be clinging on to a die-hard fan base by a hair. In 2007, Netflix entered the streaming market. For example, CNBC reporter Sarah Whitten recently pointed out that DVD sales have But streaming services like Netflix (NFLX) and Amazon Prime (AMZN) spend over $10 Billion on content every year. In fact, Redbox is pretty much the only way we rent movies now. Outerwall went private five years ago at a valuation of $1.6 billion, with Redbox generating ~three-quarters of its profit and more than four times as much revenue as it will this year. I/we have a beneficial long position in the shares of AMZN either through stock ownership, options, or other derivatives. But in every aspect of the business plan, Redbox is far behind. On Monday, Redbox announced that it reached a definitive agreement to combine with Seaport Global Acquisition Corp., a publicly traded special purpose acquisition company (SPAC) in a deal giving the combined company an enterprise value of $693 million. They're looking for a great deal, and because of that, free content serves them well and they're happy watching ads to monetize that. Without the ability to make projections, a newly public Redbox simply would have looked like a dud: a subscale digital offering combined with a legacy business whose revenue declined 40% year-over-year in 2020. Not only can you rent it from Redbox, but you can rent it on Amazon or iTunes, and every time a customer transacted there, they paid us because we own those rights to the movie. With $350M of long-term debt and an unprofitable business, Redbox shares don't seem worth their risk. Redbox's Growth Projections: Redbox says the SPAC deal will help the company accelerate its technology development, content acquisitions and marketing initiatives. Video progress is saved to your account so you can stop watching a video on one device and resume it later on another device. We make it infinitely simpler because you can get all those movies at Redbox. Whether you're stocking up for the next big holiday bash or simply trying to feed your family, you might want to reassess your Costco shopping list. It's also difficult to see how the Live TV and AVOD (ad-supported video on demand) businesses are doing anything at all given that Redbox's digital revenue for the second quarter totaled just $7.3 million and fell 20% sequentially. There are a few problems with the story, however. In fact, they didn't even project that their legacy business would recover to 2019 revenue levels by 2023 in a May 2021 investor presentation that also had a $500M estimate for legacy revenue in 2021, which they will fall short of by ~50%. The move prompted an exodus of some 800,000 membersand a disastrous 77%decline in the companys stock. Carlson had signed off of Friday's show by wishing viewers the "best weekend" and telling them he'd be back on Monday. November 2020. Absolutely. as well as other partner offers and accept our. That is an exceedingly dangerous position for a declining business to be in. Our customers are very value-conscious. Redbox also is developing its own content, with a number of launches already and a goal of 36 titles per year going forward. SGAM Price Action: Shares of Seaport Global Acquisition Corp. were up 0.81% Monday at $9.95 Monday. The year was more than one-third over when that happened. One was building out our marketing capabilities and assets. Growth in the digital business seems unlikely; hitting $40 million again, let alone the prior $70 million top-line target, seems difficult against first-half revenue of just $16.4 million. If all of the shares convert, all of the shareholders, which includes Apollo, will own 59% of the company. A: We've got a little over 95 channels on our live TV service today. Your email address will not be published. Yet RDBX took off almost immediately after the blog was posted at 2:58 p.m. Eastern: While it's not clear how much volume took place in that last hour, for the day 10.4 million shares traded, more than 5 times the current float (that float figure comes from Redbox itself). But also a little too qwik for its customer base especially when it came with a substantial increase in price. A: We saw a reduction of about 50% fewer movies because of COVID. clearing $1 billion in profit in three of the last four years. 15 Most Important Assets That Will Increase Your Net Worth. It's a story, for both the legacy DVD rental business and a nascent digital offering, that rests on future potential, not past results. I am not receiving compensation for it (other than from Seeking Alpha). Good rebranding can effectively update a companys look to reflect changing times and gain the attention of new customers. We tend to take up North American distribution rights, and these are not the movies for which we're competing with an Amazon or a Hulu in paying $50 million, $100 million, $150 million per movie. Now I know what movies you've already watched. And if an investor thinks that Apollo believes this company is worth $12 per share, she should ask why they were happy to dilute at $10. Escape From Pretoria 3/6. A company rebrand can be a good thing providing it works. The closures are part of the plan the retailer announced back inFebruary 2020to close 125 stores by 2023, about one-fifth of total locations. Despite the shift in strategy, Starbucks says "high-traffic areas like malls, airports, campuses, and our other licensed locations will remain a key pillar of the Starbucks experience.". Related Link: Netflix Testing Theatrical Model With Army Of The Dead. Dark Waters 3/3. The companys fictional owner, Jack, debuted in the companys commercials beginning in 1995. That process, though, wasnt without some pretty significant hiccups. The company now offers banking services, credit cards, wealth management, home loans and refinancing. There are only two forces that unite men fear and interest. Napoleon Bonaparte. Prescient? Entering text into the input field will update the search result below. This ledto theproduction of thefamous red, white and blue cans moving to the Strohs plant in La Crosse, Wisconsin, and the Milwaukee operations closed down after 152 years in operation. Free on-demand video is available essentially everywhere. That will change, but you're going to see a lot more [consumers] moving in and out of services, and so you're going to see a lot more pressure on subscriptions as people return to normal life. Variety is a part of Penske Media Corporation. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. And yet, RDBX has now spiked twice in less than three weeks. Is this happening to you frequently? But like many news organizations in the digital age despite remaining profitable it has struggled to adapt to changing reader needs. Todays announcement brings us one step closer to building an entertainment ecosystem and underscores our steadfast commitment to enhancing our customer value proposition, Galen Smith, CEO of Redbox, said in a statement. However, the brand got a chance to refashion itself for the new millennium when it took social media influencers for a ride with its Palessi publicity stuntin late 2018. Instead, there's a supposed short squeeze (though days to cover, at last report, was below 1) and a quick amplification of an analyst's $35 price target. Director: Christopher McQuarrie. Thats where someone like Redbox can drive retention through having additional benefits. What's really important is having the right kiosk counts in the right locations. Year: 2018. Redbox is already in the streaming business. For example "Shadow of the Cloud" has been one of our best performing films. Each of the businesses were separately managed. Viewers with a science-fiction addiction gravitated to the SciFi Channel, which rolled out staples like The Twilight Zone along with a straightforward logo featuring a stylized image of Saturn that let you know exactly what you were getting. The company, As the slide above shows, management does expect a strong rebound. A Quiet Place: Part II release date: March 20. It also isn't an option for those without internet service, who might find Redbox the most convenient way to get a movie. Mass closures, referred to as the retail apocalypse, have continued over the past few years. Q: What trends are taking place in the kiosk space? The digital business has the fundamental profile of a typical SPAC target. Redbox was five weeks into the second quarter. Macy's told employees at 45 locations that their stores would close in 2021, CNBC first reported. Question: What happens when you eliminate sugar from your diet? Q: What customer experience technologies are you excited about? The story here didn't seem particularly attractive when the merger was announced in May; it looks far worse after a subsequent and significant cut to the 2021 outlook. Approximately 70% of those customers identify as late adopters of new technology, which Redbox said gives the company a unique opportunity to convert customers to its digital platforms over time.. In 2007, Netflix entered the streaming market and ultimately laid the groundwork for a complete revolution of how Americans access their movies and TV shows. Growth stalled in 2021 and revenue is now on track to decline in 2021. latest-news-headlines There's a similar level of competition in free live TV from ViacomCBS (Pluto TV), NBC (Peacock), Roku, and too many others to name. Read more: The CEO of Planet Fitness is preparing for a brick-and-mortar fitness boom as the company creates content to disrupt digital offerings made popular by the pandemic. We look at it on a project-by-project basis. Sometimes, company rebrands turn out to be utter failures, leaving the business to struggle out of an even deeper financial pit. Redbox said it converts on average over 80% of its adjusted EBITDA directly into free cash flow. Adjusted EBITDA was negative. Results so far this year (and last as well) suggest there's a reasonable chance many more of those customers already are streaming that Redbox believes. Their legacy rental business is increasingly obsolete and unprofitable as it's replaced by digital distribution. Currently, Redbox prices are $1.75 a night for DVDs and $2.00 a night for Blu-rays (before tax). We have approximately 40,000 kiosks now around the U.S. Q:Aside from the EMV and the mobile payment capability, were there any other changes made to the kiosks? Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. That transition of course worked out rather nicely for Netflix (NFLX), and at an enterprise value of about $1.1 billion, Redbox clearly does not have to be the next Netflix for RDBX stock to rally. A: They felt very similar to us in terms of the opportunity ahead. On the marketing side, we had a great opportunity to build out our loyalty program. Revenue of $40 million in 2020 is projected to grow nearly tenfold in three years. Since their online services lack any competitive advantage, the only unique asset to support digital revenue is their kiosk business. In June 2016, Tribune Online Content shortened its name to tronc, adopting a colorful modern logo and even catching the internets lowercase vibe by dropping the capital letter at the front. Redbox is in a difficult situation. Today, it (going public) is really about the opportunity to bring in additional capital and really drive the business. But now, Redbox finds itself on the other side of innovation, replaced by streaming services and on-demand digital rental. It's about providing the best quality home entertainment for everyone. Please try again later. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Gap Inc. is closing about a third of Banana Republic locations "with the goal of having a smaller and healthier fleet of stores," the company said. Redbox's plans call for 36 exclusive titles to be released annually. Francesca's filed for Chapter 11 Bankruptcy in December and closed 140 of 700 total stores in January. We do a lot of optimization where we try to make sure we have the kiosk in the best location to serve the customer base. Those redemptions, however, leave an extraordinarily thin float until lock-up expiration, which likely is several months away. See: 22 Side Gigs That Can Make You Richer Than a Full-Time JobFind Out: How To Is a recession looming? An on-demand movie such as the latest Ghostbusters can be rented from Redbox.com for $6. To top it all off, Redbox now has legitimate balance sheet concerns. Disney, Best Buy, and Macy's are a few of the stores planning to close locations this year. Most streaming on demand services charge $5.99 for new release movies, and Redbox charges $2 for Blu-ray. But Allys rebranding didnt stop with a friendly-sounding name change.

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