Redbox Stock Jumps 25% in Value Following Share Offerings

Redbox Entertainment’s stock June 8 jumped 20% to $10.31 per share in pre-market trading — the day after closing up 25% at $8.55 per share.

The legacy kiosk disc rental service is set to be acquired by Chicken Soup for the Soul Entertainment, owner/operator of the ad-supported Crackle+ streaming platform, in an all-stock transaction valued at $375 million. The company is transitioning from a packaged-media focus to digital distribution, including ad-supported and transactional VOD, as well as free ad-supported streaming television, or FAST.

The company June 3 offered more than 60 million shares of Class A common stock in three separate purchase warrants for 6 million, 10.7 million and 32.7 million shares, respectively. The warrants are apparently fodder for “meme” investors eager to jump on the bandwagon of a company whose shares are priced low and easily prone to roller coaster shifts in valuation.

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“Meme investors think the company is worth nearly $1 billion ($500 million of equity and $400 million of debt) and are baffled why a money-losing company with … zero cash would sell for close to zero,” Michael Pachter, media analyst with Wedbush Securities in Los Angeles, said in an email.

Pachter believes the initial 6 million shares for sale allows warrant holders to convert and sell at the market rate, and that Redbox doesn’t get any of those proceeds, other than a conversion of existing warrants.

“The stock might be up on that, but if my reading is correct, the meme traders are making a huge mistake,” he said.

Netflix Shares Rebound Following $26 Billion Market Valuation Loss

Netflix shares are on the rise again following a seven-day freefall that saw the SVOD pioneer’s stock plummet nearly 20% (or $26 billion) in value after posting disappointing Q2 subscriber growth numbers.

Shares closed July 24 up 3.5% to $317.94 per share — still a ways off the $362.78 valuation on July 17 when Netflix reported fiscal results.

Indeed, the service posted a loss 126,000 domestic subscribers after projecting growth of 300,000 subs. It was Netflix’s first domestic sub loss since 2011 when co-founder/CEO Reed Hastings announced – in an ill-advised tweet from home – the separation of the company’s legacy by-mail DVD rental business from its subscription streaming business.

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Despite quickly cancelling the move following subscriber blowback, Netflix shares nosedived 75% in value.

The latest stock decline reportedly cost co-founder/CEO Reed Hastings, who owns 2.5% of Netflix’s stock, $850 million.

Before the drop, Netflix shares were up 35% year-to-date. The service expects to add 7 million subs in the current third quarter, which ends Sept. 30.

Separately, Netflix launched a mobile-only subscription plan in India for 199 Indian rupees ($2.89) monthly – less than half the service’s basic $7.23 plan. The SVOD service’s standard plan in India costs $9.41 and $11.58 for premium access.

The move comes after Netflix added just 2.7 million subs globally in Q2 – slightly more than half of the 4.8 million subs projected.