Redbox Entertainment Inc.

Redbox Entertainment Inc. (NASDAQ: RDBX), originally Seaport Global Acquisition Corp., is a motion picture and television studio. The Company's primary goal is to provide entertainment to its clients via physical media and/or digital services. Legacy Business and Digital Business are the two segments in which the company works.

Key Highlights

• On May 24, 2022, Redbox Entertainment announced that it has acquired the North American distribution rights to the WWII action-drama Come Out Fighting. The film will be released in 2022, with a limited theatrical run and day-and-date On Demand availability.
• Redbox stated on April 26, 2022, that Kavita Suthar would resign as Chief Financial Officer, effective May 16, 2022, to spend more time with her family. She joined Redbox in 2015, rose through the ranks to CFO in 2020, and was instrumental in the company's successful SPAC merger and public offering in 2021.
• Redbox Entertainment Inc's revenue fell 18 percent to USD63.2 million in the three months ending March 31, 2022. Due to poor market circumstances, revenues reflect a drop in demand for the Company's products and services.
• The net loss was reduced by 95% to USD1.4 million. Interest gained on T investments increased from USD7.2 million (expense) to USD7.3 million (income), while depreciation and amortization decreased by 9% to USD25.1 million (expense).
• The cash and cash equivalents and long-term debt for the quarter ended March 31, 2022, were USD13.66million and USD301.37million respectively.

Stock recommendation

RDBX's stock price has increased by 473.29% in the past three months.  As can be seen in the chart below, the price is currently above the short-term (50-day) SMA and long-term (200-day) SMA, with RSI at 57.42, after correcting from the overbought area. Furthermore, based on the chart and the latest three-month return, it can be said that the stock is extremely volatile and subject to unusual price changes, therefore high precaution is needed when considering this stock in a portfolio.

Given the stock's considerable abnormal boost in the past three months, financial results, and technical analysis, we propose a "Watch" rating on the stock at its closing price of USD 10.09 as of June 14, 2022.

One Year Technical Chart, as of June 14, 2022. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

* Closing price as of June 14, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.