Redbox Reports Poor Q4 Results, Stock Plummets

Redbox Entertainment said its fourth-quarter results (ended Dec. 31, 2021) were negatively impacted by the ongoing pandemic that saw the kiosk vendor have access to fewer new-release titles than expected. The news sent shares of the company plummeting more than 50% in premarket trading.

In a Feb. 2 regulatory filing, Redbox said it received 24 new titles in the quarter, far below management expectations.

“Redbox rentals have not recovered to the extent expected and, notwithstanding the year-over-year increase in new releases, were lower than the fourth quarter of 2020,” the company said in the filing.

Redbox has expanded its business model in recent years. In addition to offering consumers DVD/Blu-ray Disc rentals at kiosks, the company offers content through PVOD/EST, ad-supported streaming and SVOD. 

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Redbox reported an increase in marketing and on-demand expenditures. Costs also increased as Redbox purchased more digital content. During that period, increased costs have not been offset by an increase in revenue. Redbox also reported that its business has experienced an increase in competition from new and existing competitors.

The company reported that on Jan. 28 it borrowed the remaining availability under its revolving credit facility.

Redbox’s primary sources of liquidity are cash on hand, cash flow generated from operations, and amounts available under its revolving credit facility. Management is actively taking steps to decrease monthly costs, delay capital expenditures and increase revenues, according to the filing. Redbox is also evaluating a variety of strategic alternatives.

Michael Pachter, media analyst at Wedbush Securities in Los Angeles, said he believes Redbox can turn its fiscal condition around as it gets access to more packaged-media content.

“As its members return to the kiosk more regularly, that will give Redbox the opportunity to upsell its 39 million loyalty members to its digital products,” Pachter wrote in a Feb. 3 note. “Its members are late technology adopters, and some may opt for Redbox’s simple and inexpensive transition to streaming.”

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