Coinstar, Redbox’s parent company, has seen its share prices drop 14% during the last few weeks. This decline, according to Merriman Curhan Ford analyst Eric Wold, is due to investor concerns about Redbox’s upcoming Q4 results and its lack of a digital initiative.
Usually bullish on Coinstar, Wold believes that Redbox will partner with a third-party on its digital service, a move which would reduce risk and cost. Says Wold on a potential partnership:
“While this may reduce the incremental long-term profit potential from digital, we are more focused on the reduced upfront risk and capital spend, the faster time-to-market and the potential for structuring it in a way to drive incremental traffic to the Redbox kiosks,”
Regarding Coinstar’s upcoming results for the fourth quarter of 2010, Wold predicts that Redbox’s numbers will come in at the lower end of estimates, at least in part due to the fact that several of the major titles released in Q4 of 2010 were animated. Animated films typically perform more poorly than live-action films in the rental market.
Do Coinstar shareholders have a right to be nervous, Insiders, or will Redbox come through with a solid quarter and compelling digital strategy in the near future?
(via Home Media Magazine)