After seeing red for so many years in the form of its major moneymaker, Redbox, Coinstar may soon be seeing green. The company already owns a 15-20 percent stake in ecoATM, a cell phone recycling kiosk operator, and could acquire the entire company.
B. Riley & Co. analyst Eric Wold thinks that such an acquisition could pay off handsomely for Coinstar, and the ecoATM side of the business could quickly surpass Coinstar’s Redbox business as a revenue generator.
“We estimate that easily more than 1 billion mobile phones could be retired within the U.S. over the next five years alone – demonstrating a robust monetization opportunity for the companies emerging recently to tackle that challenge . . . We believe a disproportionate portion of Coinstar’s valuation is focused solely on near-term Redbox rental trends – which not only misses the significant remaining opportunity for physical rentals, but gives no value for the likely acquisition of ecoATM – a company that could easily dwarf Redbox within 5 years,”
What do you think, Insiders? Will Coinstar cash in on the rising trend of cell phone trade-ins?
[via Home Media Magazine]