After announcing that its upcoming results would likely come in below forecasts, Redbox parent Coinstar saw its stock plummet 25% Friday morning. The blogosphere burst to life, with many cackling that Redbox’s alleged weaknesses were finally catching up with it. Not so fast, say several prominent analysts.
Mark Harding, an analyst with Maxim Group, believes that Coinstar’s stock was punished because of overly high expectations:
“A lot of the disappointment with Redbox had to do with expectations being so high as opposed to the actual results being bad. When you look at DVD rentals, the growth is still there,”
Wedbush Morgan analyst Michael Pachter was a little more succinct (and earthier) with his assessment of the situation:
“Coinstar’s biggest problem is they suck at guidance, not that their business is bad . . . They are a good company, but they are subject to growing pains.”
Pachter also believes that Redbox management will learn from their inventory and forecasting missteps and avoid a repeat of this stock punishment in the future:
“In our view, these share losses are unlikely to grow next year, particularly if Coinstar management takes steps to address the inventory imbalances it experienced in Q4,”
D.A. Davidson & Co. analyst John Kraft thinks that Redbox will do better in the future at matching content offering with consumer preferences:
“Management is already learning from its mistakes and claims to have taken a number of decisive steps to better align content with demand,”
The analysts have weighed in, Insiders, and now it’s your turn. Is Redbox really just experiencing growing pains, or is a larger trend emerging that these analysts aren’t addressing?