Hey stuart, i like the idea of contacting US Attorney's Office. Can you email us a sample or a piece of what you wrote to them? Since you were (are?) an attorney you probably have a better grip on the terminology and the nuances of how to phrase the letter/grievance so as to send a right message rather than insult/annoy them.
My email is same as my username. Thanks in advance.
What do you mean they did not scale down enough last quarter? They have more data/facts/metrics for each kiosk that they reveal in filings so I don't feel comfortable second guessing them on that. They have said they will downsize and continue to optimize their remaining kiosks.
Yeah the guidance was lowered - primarily because they raised an additional amount of money which increased interest costs. But still doesn't change the fact that it's ridiculously cheap at these levels (even assuming ecoATM is a dud). Netflix isn't really a good comp because there are ZERO recent/fresh titles there. A better comp is Amazon and iTunes.
Speaking of Amazon and iTunes, there was a question on the conference call about that - "do you see VOD pricing going up or down?" and CEO basically said that studios want to maintain fat margins so he sees the pricing going up rather than down.
Again, cheap on P/FCF basis with a proven business model with pricing power is what makes it attractive for me. Don't get me wrong though - you can make money being short and long and I'm not long because I'm in love with Outerwall, I'm long only because the risk/reward is so damn attractive in being long, as opposed to being short.
Hey P2A, appreciate your comments here. Can you give a rundown (elevator pitch) of the thesis on WAG? Is it a "great business at a fair price" ? Or is it a special situation like EBIX where the market is misunderstanding something?
I don't understand why you keep comparing it to blockbuster. Redbox does NOT have fixed costs like Blockbuster - no stores, no employees to staff each store, etc. Redbox has a lean operating model that can be scaled down to accommodate any declines without imploding. There's no competition and the masses don't have a meaningful alternative that provides them with cheap movies at the 1.2-1.5 per night.
Any other concerns?
Stuart I'll message them on facebook too. Can u tell me what u wrote in the message (briefly) ? Thanks.
Great news! Excellent validation for the long-thesis. Increased my position today.
Heh...580 isn't that huge number...less than $10k outlay.
I'm looking at selling (writing) December 2014, $10 strike price puts to collect a 90 cent premium.
fishart4 - I see what you're saying.
Whether we like it on not, the fact remains that investing is a forward-looking game. Which means past performance doesn't matter at all. You can't invest looking in the rear-view mirror. I see that the stock you mentioned had a tremendous run...but that's the PAST.
Investing involves discounting the obvious and betting on the unexpected. Looking at Gilead, I see almost everyone thinks Gilead will make a lot of money. Looking at EBIX, some people think it won't survive...and has discounted it by 40-50%
Do you think EBIX will come out clean? And if so, what will it be worth? If not, then this stock isn't for you. And of course, no one can pinpoint exactly when things will turn, which is why it's best to own a BUNCH of undervalued stocks, not just a single one.
A company that MAKES MONEY RIGHT NOW is worth 0 because blockbuster went bankrupt...?
I agree. I think it's emotions more than anything, and humans are, by their very nature, full of biases and irrationality.
It is those who can recognize and mitigate their biases and irrationality that can take advantage of the mis-pricing in the market.
@dvds_are_dead: I really want to know - how much do you think is the company - Outerwall - worth? Surely a cash generating entity cannot be worthless, right? I honestly want to know how much you think it's worth.
Still wondering why the hell it would take so long for the investigation to conclude. Either there's (1) something major, malicious and criminal going on that needs to stop such that the entire business model is in jeopardy and needs to end, or (2) there is something minor that can be fixed by a slap on the wrist while the core business is legitimate and can go on
If it's (1) then why would it take over a year for the government to put an end to it? Wouldn't they rush to stop it, arrest those responsible and announce it already? This is what I don't understand.
And the more the time passes, the more I become convinced that it's because there are really nothing bad going on, or it's (2) in the worst case scenario.
Redbox instant was never a huge part of Outerwall to begin with. Sure $65M would've been better spent...but at this point it's water under the bridge. I'm happy to buy OUTR on the cheap on the demise of Redbox Instant.
Core redbox biz was still minting money, last time I checked. Sustainability of that cash flow is all that matters to me.
Overall revenues are much more important than SKS (Sales Kiosk Sales). If you increase the number of kiosks at a single location (say at a crowded location like a walmart supercenter), the SKS will go down the overall revenue will go up.
Don't forget they can bump up the price per DVD rental from $1.2 to $1.3-$1.4-$1.5
Last time they raised prices, revenue experienced a pretty good jump as people don't mind paying extra 10 or 20 cents per day to rent the movie.
Same here. The $10 strike puts I wrote, expired today and I made about 5% on my total capital (the amount I would have to pay if I were assigned the shares) - in the span of 45 days.