What's up investors? Welcome back to
the channel. today I want to talk about
redbox nasdaq ticker RDBX. this pennystock
stock is about to go insane and could be
the biggest short squeeze of 2022.
redbox stock has already gained over 150%
in the past month but considering just
how much this stock is being shorted,
I believe that this is just the beginning
of what might be a 10x or more - But be
under no illusions, there is a reason why
this stock is being so heavily shorted
and in this video I will explain
everything that you need to know that
should help you learn how to get in and
out of the short squeeze play. in the
past week there has been a lot of social
media hype around this talk too and some
of it is just straight up lies so in
this video I will shed some light on the
real facts that you need to be aware of.
This penny stock could easily 2x within
days and I feel that this could
definitely be a penny stock to buy in May
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I tweeted about redbox ($RDBX) on wednesday and
this went on to gain over 75% in the next
48 hours. So if you're new to this
channel make sure you subscribe and
follow me on twitter to stay up to date
and remember to turn on notifications so
you never miss a video with the
potential to make you money. I want to
point out that i'm not a financial
advisor and this is not financial advice
now let's get into it with a quick
overview of the company and the
investors presentation for anyone that
is unfamiliar with redbox $RDBX Stock as a company
Redbox is a once leading entertainment
company that gives consumers access to a
large variety of content across digital
and physical media
redbox ($rdbx) is known for their bright red dvd
rental kiosks that tend to be placed in
busy retail locations to offer a
selection of dvds that can be rented for
a few dollars the company also operates
a growing digital stream service that
provides paid movies from hollywood
studios and hundreds of content partners
as well as over 130 channels of free
ad-supported streaming television #redbox
was founded 20 years ago
and was once the low-cost competition to
video rental stores like blockbuster
adding thousands of new kiosks each year
but now redbox finds itself on the other
side of innovation replaced by streaming
services and on-demand digital rental
after growing rapidly for several years
redbox slowly seen its market decline as
the likes of netflix or amazon prime
started to grow rapidly
but redbox does still have about 40,000 kiosks
throughout the united states (#shortsqueeze)
in fact when we look at the investors
presentation they estimate that ninety
percent of all americans are within a
five minute drive of a kiosk which does
provide huge exposure that the company
can take advantage of
one of these ways to take advantage is
the digital out of home ad opportunity
with four thousand digital video screens
being installed across retail placements
to enhance in-store marketing
capabilities
with the opportunity to expand more
broadly across kiosk network and they
estimate this to provide
a 70 million dollar potential annual
revenue opportunity
but it appears that the main focus for
redbox right now
is the shift from video rentals through
their kiosks over to subscription video
on demand by converting a small
percentage of existing customers
to consistent multi-product users
could lead to 800 million to over 1
billion in annual revenues from this
alone for comparisons netflix who
recently
published their quarterly earnings
report reported nearly 8 billion dollars
in revenue for a three-month period
and this was considered a terrible
quarter with the stock tanking about 50
percent in april
now redbox is no netflix but then again
12 years ago neither was netflix
12 years ago redbox was the established
company that looked to have a huge
future especially after blockbuster
closed up and other rental stores
followed suit but it was netflix that
made the most of technology and now it
is up to redbox trying to save itself
but the fact remains that if redbox can
successfully convert the other business
into a globally recognized subscription
video on demand service then today's
valuation of just 270 million dollars
could seem like pennies
now how many times have you heard people
refer to some penny stocks as
this stock is like buying amazon
or buying google or tesla when it was
only a few dollars well right now buying
redbox could literally be like buying
netflix when it was only a few dollars
but there are some caveats to this
some very very big ones
to explain this this talk went public
late last year through a reverse merger
with the spac
seaport's global acquisition corp and
despite initially going as high as 27
or dbx dock began to tumble
dropping as low as 1.61 cents last month
now I tweeted about this a few days ago
when the stock was still just three
dollars that this stock could make
another 100 gain easy
right now rdbx stock has got a growing
army of followers
and unlike some of the meme stock
squeezes or pumps or whatever you want
to call them over the past few months
this company
actually has got true meme stock
potential
now that is not me trying to discredit
the actual business but this does have a
lot of similarities to gme stock back in
2020
in the long term
redbox might be able to build back up to
a successful company but right now this
is a short squeeze play and for the
first time in a long time this is a
short squeeze where the numbers do
actually add up first of all this stock
is heavily shorted and that is not
really surprising when you see the
company's financials so stick around for
when I look at these in a moment the
financials are an extremely important
part of the overall investment look at
this stock even if you were just
interested in the short term squeeze
play
understanding a company's financial
statements will help you understand
whether to hold or to sell when a stock
starts to drop again
another
major factor here is that there is
actually a very small number of shares
overall and a small free float
so look at this post over on reddit this
was from two days ago
by everything crypto 2018. 52 percent of
the free float is short the average
borrow cost is 320 percent
75 percent of the free float is on loan
100 utilization
and a tiny free float of only 2.7
million
and this data has been taken from
ortex.com but he also states here
the five reasons why this is fair and
away the best squeeze play on the market
the number one the shares are cheap
although they've gone up a bit since
this post
but there are no options
so this can't be easily manipulated as
some of the other squeeze plays people
are talking about
number two this is absolutely critical
for people to understand the free float
is only 2.7 million the main reason most
squeezes don't end up coming to fruition
is because the float is too large
this float is tiny
for comparisons the float of a tyrion is
26.2 million
nothing against atr stock just trying to
illustrate how tiny the red box float
really is think about it 52
of 2.7 million is short which means
there are only 1.3 freely traceable
shares all retail has to do is buy the
float which sounds crazy but it's
absolutely doable in this case it's only
a million shares if 5 000 people were to
buy 200 shares each the entire free
float will have been bought
now this really does have so many
similarities to gme stock two years ago
and I feel that although redbox has gone
from the lows of 160 up to 590 I think
that this is still just the beginning
take a look over at stock twits for
example I remember when the message
volume from mullenstock was less than a
few hundred a day then at its peak it
went up to over one hundred thousand now
i'm not comparing mullen to redbox as
companies these are not on the same
level at all that was simply a stock
that was hyped up by people for various
reasons that I won't get into here i
have made videos about mullen where i've
explained my thought process on that
stock I just want to illustrate just how
early we are right now in red box this
stock has been gaining day after day now
for about two weeks but had largely went
under the radar it was only on friday
when the stock gained over 69 percent
that everyone started to take real
notice but look at this the message
volume here is still only about six
thousand a lot of people
are still not aware of this stock and
think of the amount of gains this stock
has already seen with very little
interest I really do think that this
could explode next week as the level of
interest dramatically increases rdbx
stock is currently number three on the
most active list and number one on the
new watchers list and the stock was also
trending on friday and will be trending
again on monday so before we look at the
charts let's take a look at the most
recent earnings report and this should
help everyone to understand the risks
involved here if you are considering the
long hold which should also show you
exactly how this stock has ended up
being so heavily shorted in the first
place looking at the company's balance
sheet we can see that they have total
assets of 378 million dollars and total
liabilities of 440 million this means
that redbox is in negative equity to the
value of 62 million
to make matters worse
long-term debt is by far the largest
liability while goodwill is recorded as
the biggest asset now if you follow this
channel you will know that I hate to see
goodwill being stated as one of a
company's major assets
goodwill is not a real asset goodwill is
basically the opposite of a bargain
purchase where an asset is bought for
below its fair value the difference must
be recorded somewhere the same goes when
an asset is purchased for above its fair
value in this case the difference is
goodwill and gets recorded in the
non-current assets my problem with
goodwill is that it is not tangible it
is not real
this 147 million dollars could simply be
written down as an impairment in the
very next earnings report so I tend to
remove goodwill from my calculations
when analyzing companies this would
leave total assets of 230 million
dollars compared to total liabilities of
440 million to put this simply this is a
terrible balance sheet current
liabilities are also two times current
assets and the fact that they have only
18 million dollars in cash
is very worrying
for rdbx stock this coupled with the
fact that revenues have been dropping
dramatically year over year down 66
percent from 800 million in 2019 down to
280 million in 2021. this is made even
worse because costs have not even halved
what was once a profitable business is
now a huge loss maker losses of over 140
million dollars for 2021 so this raises
a huge going concern issue for this
company and we can see here in the notes
to the accounts just how bad things
really are
in january
redbox borrowed the remaining
availability under its revolving credit
facility and on the 1st of april 2022
the company announced a reduction in
force of 150 employees which should lead
to a reduction in cost of 13 million but
this is only a fraction of what is
needed
and management have highlighted the
level of the problems that they are
facing there is substantial doubt about
our ability to continue as a going
concern and this could materially impact
our ability to obtain capital financing
and the value of our common stock if we
cannot continue as a going concern our
stockholders would most likely lose all
or most of their investment in us and
holders of our indebtedness may also
suffer material losses on their
investments so make no mistake about
this I really cannot state this strongly
enough
anyone who is considering investing in
this company for the long term this is
extremely high risk
extremely high risk and not a good risk
to reward ratio
now this is not financial advice in any
way do what you want but I can only see
two things happening here
either redbox do not do an equity
offering and they go bankrupt within the
next 18 months
or once the share price peaks on its
current run we will probably get an
announcement that management will dilute
shareholders just yesterday it was
disclosed the red box gets access to 50
million dollars in additional financing
as part of a restructured agreement with
hps investment partners
this will do very little in the long
term
considering the level of losses being
made but this could help with the short
squeeze scenario
looking at the charts we can see that
the stock went public back here in
november and then the steady decline
that the stock made before bottoming out
in february and march and looking closer
we can see just how much the stock has
risen over the past 10 days from less
than two dollars on april 20th to over
six dollars on friday I do expect that
this stock will run strong again next
week and I would not be surprised to see
this break ten dollars within a few days
however but if this does begin to drop i
would not be surprised to see this drop
heavily after all there is a reason why
this is so heavily shorted there is a
reason
every analyst covering this talk have
all slashed their ratings and price
targets recently the most recent of
these being can accord dropping their
price target from sixteen dollars to
just three dollars ironically the day
that they slashed their price target was
also the day that the stock began to
rally hard so guys what do you think of
redbox will you be investing in this
talk either in the short squeeze or for
long-term potential drop of comments and
let me know what you think of this
company and if you enjoyed my video i
would greatly appreciate if you could
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catch you in the next video