Coinstar (CSTR) fell dramatically during Thurday's after-hours session. You had to feel bad for the company's shareholders. Imagine, a big drop for the owner of the great, media-game-changing Redbox?
Yep, it's true. Shares of the company, which counts Netflix (NFLX) as a colleague, lost over 24% to land at $43.05 after closing the regular session down slightly to $56.95. The 52-week high for the stock is $67.56 while the 52-week low is $25.37. Sure, $43.05 may not be as ugly as $25.37, but it's still ugly, my fellow investors.
The catalyst for this negative price action can be sourced to a reduction in guidance for the fourth quarter. According to MarketWatch, management believes Q4 will see per-share net income of between 65 cents and 69 cents; execs had thought the business might do between 79 cents and 85 cents per share. As mentioned in the cited article, a 28-day release window for DVDs is apparently in part affecting the prospects.
Not good, not good. I'm writing this ahead of the bell, so I obviously have no idea what's going to happen by the end of Friday's session. I would have to assume that the stock will certainly come under pressure. Question is, does a pullback in price represent an opportunity in this company?
Not to me. I would definitely skip the shares for now. Yes, I was previously bullish on this name; simply put, I no longer am. That may change, but Thurday's after-hours movement should frighten individual investors.
Is this the end of Coinstar? Not necessarily. And maybe when the market gets more information about what management's plans are for the future there may be a reason to become bullish once again. I'll simply have to reassess the thesis at a later date.
Disclosure: I don't own any company mentioned; positions can change without notice.