Investment Analysis and Stock Valuation on company: REDBOX

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Investment Analysis and Stock Valuation Company: REDBOX Automated Retail LLC Customer Name University Name Redbox Automated Retail, LLC Redbox is an American company that has its scope of business in the rental of DVDs, Blu-Ray Discs, and also video games using fully automated retail kiosks…

Introduction

I. Three Step Valuation a. General Economic Influence: At a time when a sluggish and struggling economy prevails in the United States, interest rate being stagnant at 0.25% since January 2009 as an example, the rental kiosk service of DVDs, Redbox has been identified as enormously successful in its operations. The economic influence has not hit the company on a tough scale. The simplicity and value of the company’s product and its pricing has made Redbox manage inflation adjustments in the form of rises in its product prices easily as compared to its competitors. To offset rising costs especially increasing debit card fees, started from the 31st of October, 2011, a standard Redbox rental costs $1.20 rather than $1.00 which depicts an escalation of 20%; this is in clear contrast with the huge 60% rise in prices by NetFlix, one of Redbox’s competitors. b. Industry Influences: Redbox faces one of the biggest pressures from Blockbuster, the leader in rental home entertainment which has vast market coverage and possesses a strong brand image. Blockbuster’s retail store model at first appeared to be a threat for Redbox’s rental model but due to Redbox’s futurist strategies, now Redbox is bullish pertaining to the growth opportunities for its $1 rental model. ...
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