If you want to trade Redbox stock, you must trade it under a new ticker now. Apollo Global Management bought out Redbox. Redbox had officially IPO’d on October 25th, 2021. However, in 2022, Redbox shareholders approved its acquisition by Chicken Soup for Soul Entertainment. Being traders, we look at everything: the sentiment, the fundamentals, and the chart. We’ll take a deep dive into all three and see if this is something that should be on your radar or not.
With Android and iOS apps available for free, you can download and watch from your mobile device or tablet. Redbox can be used with most SmartTVs and streaming boxes such as Amazon Fire TV, Apple TV, and Roku. Of course, if you want to, you can still visit one of Redbox’s retail kiosks and watch your movie in the old-fashioned way!
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At its heart, Redbox is a video rental service that allows users to rent DVDs and Blu-rays from their red retail kiosks. Despite the secular trend of streaming video content, Redbox has maintained over 40,000 rental kiosks at participating retail outlets.
These include grocery stores, convenience stores, restaurants, and gas stations. If you’ve gone shopping in the U.S., chances are you know exactly where a Redbox kiosk is in your neighborhood. Even if you’ve never used it. Redbox was established in 2002 and is based in Oakbrook Terrace, Illinois.
Why is Redbox making headlines in a year where streaming services hit all-time high usage rates during the COVID-19 pandemic? The company agreed to go public in May 2021 via a SPAC IPO merger with Seaport Global Acquisition Group. The estimated enterprise value is $693 million.
After the merger, Redbox traded on the NASDAQ exchange under the ticker symbol $RDBX. They were bought out again in 2022 by a new company. Now, Redbox stock is no longer trading under $RDBX.
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What is a SPAC IPO?
If you’re new to investing, you have undoubtedly heard the word SPAC thrown around investing discussions regularly over the past year or two. SPAC stands for Special Purpose Acquisition Company. It’s a vehicle for a company to move from private equity to publicly traded markets.
Unlike a regular IPO or Initial Public Offering, a SPAC IPO is a merger between the SPAC and the company. In this case, Seaport Global Acquisition Group (NASDAQ: $SGAM) was the SPAC, and Redbox merged with them.
The SPAC trades on the stock market as a publicly traded shell company. And the capital it raises through selling its shares goes toward the company once the merger is complete. Any SPAC-owned shares were transferred to the new public company’s stock. As a result, any SGAM shares, in this case, were converted to RDBX shares once the merger was complete.
Does that sound like an easy way to go public? It is. But it’s essentially being funded by investments of speculation rather than backed by private equity in the case of a traditional IPO. There are fewer regulations on how the company reports forward-looking growth and earnings estimates.
This is something that the SEC is currently trying to gain more control over. SPAC IPOs can go well, like in the case of Draft Kings (NASDAQ: $DKNG), or poorly, like in the case of Nikola Motors (NASDAQ: $NKLA) or Clover Health (NYSE: $CLOV).
Redbox stock was rolled into $APO once a new company bought them out.
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Does Redbox Stock Have a Chance?
As an investor, you’re going to want to temper your expectations. Redbox isn’t the next Netflix or Disney; that’s how much we know. But it’s pulling some interesting levers that may prove to be financially viable in the future.
First, Redbox reported 39 million members. Only about 13 million members are active (back to the loose regulations on how SPAC IPO companies report their numbers). Redbox already has some brand loyalty. And now that it’s backing its Redbox on Demand platform, it’s holding the hand of late adopters with a streamlined and easy-to-use app that doesn’t require a subscription.
Next, Redbox plans to get busy making its original content through its Redbox Entertainment division. So far, Redbox has released 16 original films, with another 24 on the way. Redbox reported that it’s optimistic it can regularly complete 36 original titles annually.
The company is taking a page out of the Netflix playbook. Redbox will need to ensure that it can afford to fund these pictures. Therefore, it meets Netflix’s quality standards for original content. Redbox also believes that DVDs and Blu-rays aren’t dead and that there’s still a wide demand for the formats.
If the company can focus on its streaming on-demand platform, management estimates a 27% CAGR or compound annual growth rate for revenues and 28% year-over-year growth in EBITDA. Redbox notes that customers have rented over six billion DVDs and Blu-rays from Redbox over the past eighteen years.
Redbox Stock Competitors
A lot of people get Redbox confused with Netflix (NASDAQ: $NFLX), especially after the latter used to rent DVDs as well. However, Netflix did this almost entirely by mail.
Netflix abandoned the rental-by-mail model and moved to streaming content in 2007.
Redbox has done the same, some fifteen years after the fact. When you dig a little deeper, you’ll realize that Redbox’s model differs slightly from that of Netflix. With Redbox stock now trading under $APO, let’s look at some of its chief rivals.
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1. Netflix (NASDAQ: NFLX)
The obvious one and the king of global streaming, Netflix has over 208 million paid subscribers across 190 different countries. From renting DVDs by mail to a global phenomenon that’s become synonymous with streaming, Netflix has grown to be a $222 billion company that spends upwards of $20 billion per year on producing original content. Netflix relies on subscriber fees, though. Something Redbox has avoided with their model. Instead of logging into an account, Redbox has created an on-demand site that users can use to pay for rentals or digital downloads.
2. Disney+ (NYSE: DIS)
Another mega streaming service that relies on subscriber fees is Disney+. They were the fastest-growing streaming service during the COVID-19 pandemic. With movie theaters closed, Disney utilized its streaming platform to launch new movies for a premium fee that families could watch from their homes. Disney and Redbox had some legal issues a few years back. They sued Redbox for violating copyrights to allow its clients to download Disney movies.
3. Fubo (NYSE: FUBO)
This one’s probably not as familiar to some of you. However, FuboTV is an up-and-coming player in the streaming industry that emphasizes sports. FuboTV is quickly penetrating markets in the U.S., Canada, and Spain, with more countries being added in the future. FuboTV also relies on subscribers. But, like Redbox, it focuses on a niche population of viewers. They’re planning to add sports betting integration at some point in the future.
4. Genius Brands (NASDAQ: GNUS)
If you thought FuboTV was a small company, wait until you hear about Genius Brands. The company operates with a \$478 million market cap and provides its app for free on mobile phones, tablets, and Smart TVs. The crown jewel of Genius Brands is the Kartoon Channel/ This shows children’s cartoon shows that include titles like Roblox (NYSE: $RBLX) and Stan Lee’s Superhero Kindergarten. And Shaq’s Garage. Why is Genius a good comparison? It runs the same model as Redbox with no need for subscription fees. Genius runs free through most streaming boxes and relies on advertising during the cartoons to pay its bills.
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Final Thoughts: Redbox Stock
Since Redbox stock IPO’d in 2021, another company bought them out, and their shares were rolled over into Apollo Global Management. You can now trade Redbox under $APO.
Admittedly, Redbox is still going strong in its retail market. The brand does have a loyal and faithful following that should keep the Redbox on Demand streaming platform in business.
It’s promising to see Redbox branch out, especially after it dropped the video game rental business from its brand. Creating original content can make a difference in this industry. Just ask Netflix how much shows like Stranger Things, Ozark, or Orange is the New Black did for its subscriber growth.
All Redbox needs is one big hit to attract a new market of fans. And with no subscriber fees, it could be an attractive sentiment, considering streaming services were supposed to be cheaper than a monthly cable service. Instead, paid streaming services are popping up everywhere and will become more expensive than cable.
In the end, Redbox will have to distinguish itself from a crowded field that has added NBC’s Peacock, HBO Max, Apple TV, Amazon Prime, Paramount Plus, and Hulu, in addition to the ones we discussed earlier. It will be an uphill battle for Redbox, so investors may want to wait a few quarters to see how this one plays out before diving in head-first with an investment.
Frequently Asked Questions
In August 2022, Redbox shareholders approved Redbox's sale to Chicken Soup for the Soul Entertainment. Redbox Stock was converted to Chicken Soup for the Soul shares and now trades under the ticker $APO.
Redbox stock failed to report quarterly earnings under its parent company, Chicken Soup for Soul Entertainment. As a result, they were sent a delisting warning by the NASDAQ.
Redbox is still in business even though a new entertainment company bought it out. They even have plans to expand moving forward.
