Redbox (NASDAQ:RDBX) has been on a truly impressive tear recently, posting gains that have called to mind a short squeeze. And the company is heavily shorted. Many see its business model of dispensing DVDs through in-person kiosks as outdated.
However, some analysts have speculated that RDBX stock is not in fact in the throws of a short squeeze. Rather, they see Redbox as attracting genuine interest from a new investor group.
What’s Happening With RDBX Stock
Redbox has surged more than 42% today, turning many investors’ heads. However, those gains pale in comparison to its performance over the past week. RDBX stock is up 150% for the past five days with gains just shy of 270% for the month. That’s not bad for a company that keeps getting written off.
With this in mind, let’s take a closer look at what industry experts are saying about RDBX stock.
Short Squeeze or Not?
It’s easy to chalk this surge up to a short squeeze. But as MarketWatch reports, some analysts don’t see it that way. In fact, they see it as an important trend to which investors should be paying attention.
According to Alicia Reese of Wedbush, today’s surge may be not be driven by short interest. Rather, it may be due to a renewed interest from retail investors. The analyst compares RDBX’s performance to that of popular meme stock favorites GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC).
Eric Wold of B. Riley Securities has a similar stance on the company. “With RDBX most likely in a situation where additional capital and a greater stock float could be of a benefit to the company, we would not be surprised if RDBX took advantage of this strong move in the equity in the near future to shore up its balance sheet,” he noted.
It gets even more interesting. Ihor Dusaniwsky of S3 Partners says that actual short interest for RDBX stock is only 1.32 million shares. Noting the fact that more than 158 million shares traded hands today, he told MarketWatch that “Even if every single shorted share was bought back (totally improbable), it would have had a minimal impact on RDBX’s stock price today.”
The Bottom Line
Put another way, RDBX could be headed for the stars thanks to a new group of retail fans. This suggests investors are betting on a turnaround even beyond a short squeeze story.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
