Should you buy Redbox Entertainment as YTD returns top 100%?

on Jun 14, 2022
  • Redbox Entertainment has gained 104% YTD.
  • The company has an acquisition offer of $0.69 per share from Chicken Soup.
  • The stock is still bullish at $15 but carries high risks.

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Under the current tighter economies, getting stocks with triple-digit returns is hard. However, Redbox Entertainment Inc. (NASDAQ:RDBX) already claims this spot. The stock has surged by 104.97% year-to-date while its Nasdaq-100 peers have been tumbling. We dig deeper into this meticulous stock to tell you whether it’s worth your attention.

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Redbox is an American video rental company. It specializes in DVD, 4K UHD rentals, Blu-ray, and video games via automated retail outlets. The company only went public in October 2021 through a blank-check acquisition at $10 a share. At the current price of $15.27, that represents an upside of more than 50% from the IPO price. The stock touched an all-time high above $27 in October after the IPO. 

Nonetheless, we found something interesting about Redbox. In May, the movie rental company agreed to be bought by Chicken Soup for just $0.69 per share. Despite the discounted acquisition price, the stock has climbed 430% in a month. Besides, the revenue of $63.2 million in the latest quarter was down from $76.7 million in the prior year. Losses widened to $40.9 million from $27.2 million in the previous. With no unique trigger for the huge rise, we believe Redbox ticks more red flags than fundamentals. The stock is majorly driven by hype and retail frenzy.

Redbox is bullish despite overbought conditions

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Source – TradingView

Technically, Redbox Entertainment is in the overbought region, with an RSI reading of 70. However, the stock’s bullish momentum is on and could go higher. The stock is currently holding around the support of $15.

Concluding thoughts

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We see insignificant fundamentals supporting Redbox’s meticulous rise in the recent months. The highly discounted offer by Chicken Soup also raises more valuation questions than answers. We do not recommend a buy and hold of the stock. Investors can cautiously ride the short momentums to generate value from the stock jumps.


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USA Leisure & entertainment North America Stock Market