Will Redbox Squeeze Again?
Redbox went public via a SPAC merger back in October of 2021.
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.
2022-06-18 08:15

What is Redbox?
Redbox (NASDAQ:RDBX) is a video-rental and streaming service company that was established back in 2002. If you’re wondering if it is the same company that had DVD rental kiosks at grocery stores, it is. Redbox still operates about 40,000 of those kiosks around the United States and its Redbox Live is a free streaming service with original content. So knowing all of this: why the heck is Redbox the top trending stock on social media?
Will Redbox Squeeze Again?
Redbox went public via a SPAC merger back in October of 2021. Let’s just say that since then, it hasn’t done very well, especially in this market environment. With a business involved in a waning industry and questionable growth prospects, Redbox agreed to be acquired by Chicken Soup for the Soul Entertainment (NASDAQ:CSSE) in May of 2022.

The stock was left for dead and short sellers started to initiate short positions against Redbox. The short interest for RDBX started to climb and soon it had hit levels of more than 200%. You can probably guess what happened next. Redbox started to trend on social media sites like Reddit, where retail traders target stocks with high short interest. Over two days in June the stock surged by more than 60% and hit highs of over $27.00 per share. Just a couple days after that, the stock fell back down by more than 30%.

Will Redbox Squeeze Again?
While predicting when a short squeeze will happen is nearly impossible, the stock has all the elements needed to make it happen. Redbox has developed a loyal following and has a high short interest, the two ingredients needed for a short squeeze. Just when it looked like traders had found their next meme stock to squeeze, the brokerages and institutions stepped in. If you were around in 2021, this will sound like a familiar story.

Earlier this week, Robinhood and TD Ameritrade both shut down the ability for users to buy options for Redbox stock. Users could sell, but not buy call options. Robinhood did not provide a reason, but TD Ameritrade stated that it was due to the brokerage not holding enough shares to allow for options trading. Apes will remember that this exact same thing happened in 2021 with GameStop (NYSE:GME) and AMC (NYSE:AMC).

Is Redbox a Good Investment?
Retail traders were furious and understandably so. Halting buy options for a stock because the brokerage didn't have enough shares is a questionable practice. Redbox might end up being the gamma squeeze that never took place. But is Redbox a good investment? Is any meme stock a good investment?

Redbox is a particularly interesting situation because it is set to be acquired later this year. Retail traders will likely try to send this stock to the moon but it seems like the brokerages want no part of that right now. In my opinion, the fun might be over with Redbox, even though the short interest still sits at 125%. With a finite timeline and institutions blocking trades, it looks like Redbox will end up being the squeeze that was just never meant to be.

Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Rate this article

11 months ago
They stuck a fork in it. It's over except for the tears.
Published On
2022-06-18 08:15

About the Author
Mike Sakuraba graduated with double major of English and Economics. Part time writer, part time investor, full time dad. Mike loves writing about technology, sports, and investing.

You've read 1 article in the last year
..thank you for supporting us and for visiting our site. Unlike many other sites, The Dog of Wall Street is available for everyone to read. Our focus is to provide great content for free. Do you like what we are doing? Buy us a cup coffee. It is the fuel that keeps us going..

What the heck do we do with NVIDIA (NVDA) now?
NVIDIA could continue higher well into the $400s and I wouldn’t be surprised at all. 
By Mike Sakuraba | 1 week ago

Amazon's Ascent in the AI Era: An Unstoppable Force?
Amazon is set to transform our everyday experiences with AI-powered services, although it must navigate potential regulatory headwinds on its path to dominating the AI race.
By Staff | 2 weeks ago

Will Disney's Big Risk Pay Off?
The Political Tussle That Could Redefine an Entertainment Giant.
By Staff | 2 weeks ago

Musk Stays on as CEO: What This Means for Tesla (TSLA)
Tesla is still on track to be the long-term growth stock that many anticipated a few years ago.
By Mike Sakuraba | 2 weeks ago

Inflation Unraveled, a New Economic Normal
As the economy adjusts to a new normal with higher inflation rates and businesses leveraging their power to raise prices without consumer resistance, both consumers and policy makers must adapt their strategies to navigate the shifting landscape.
By Staff | 2 weeks ago

Is NVIDIA (NVDA) a Buy Ahead of its Earnings?
So with its earnings report on deck, what should we do with NVIDIA’s stock? 
By Mike Sakuraba | 2 weeks ago

PayPal's Roller Coaster Ride
Despite recent downturns, PayPal, equipped with its robust resources, strong brand recognition, and technological adaptability, holds potential for future growth through cryptocurrency, buy-now-pay-later services, business lending, strategic partnerships and acquisitions, especially within developing international markets.
By Staff | 3 weeks ago

2 Stocks To Buy After Earnings Sell Offs
When these stocks sell-off, they can provide one of the best buying opportunities of the year.
By Mike Sakuraba | 3 weeks ago