This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Coinstar - The Netflix Investment Alternative

NEW YORK ( TheStreet) -- In breaking out its DVD subscriber base, Netflix (NFLX - Get Report) revealed a possible investment alternative.

As Netflix takes a bloodbath following its disappointing third-quarter report, pay attention to Coinstar (CSTR), said Wedbush analyst Michael Pachter.

Amid the headline metrics of domestic subscribers and a potential loss in 2012, Netflix also decided to break out for the first time the financials of its DVD and streaming business.

The company ended the third quarter with 13.9 million DVD-by-mail users and foresees further cancellation among these users, expecting to end the fourth quarter with 10.3 million to 11.3 million DVD subscribers.

"Our weekly rate of DVD cancellation is steadily shrinking, as the price effect washes through, and in future quarters we expect DVD subscriptions to shrink modestly," CEO Reed Hastings said in a letter to shareholders. "We don't anticipate any additional material investment in equipment or other PP&E and a majority of our DVD library is fully depreciated ..."

This means there could be more than 2 million displaced DVD subscribers come December, which could present a huge opportunity for Coinstar's Redbox DVD kiosks.

The company rents DVDs for about $1 per night (though it is testing slightly higher prices in select markets). While its catalog of movies isn't vast, it has a chunk of new releases and family-friendly films.

Wall Street has been so focused on streaming competition it has failed to acknowledge that a substantial base of customers still watch video via a disc. Yes, the longevity of this format is questionable, but these customers in the near-term still need someplace to rent a movie from on a Saturday night.

Redbox certainly won't kill Netflix, but it will provide a refuge for its displaced customers.

Coinstar is scheduled to report third-quarter earnings on Thursday and Wall Street is calling for a profit of 88 cents ashare on revenue of $461.8 million. Shares of Coinstar have decreased about 5% since July.

- Reported by Jeanine Poggi in New York.

Follow on Twitter and become a fan on Facebook.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
NFLX $92.19 -0.99%
AAPL $94.11 0.50%
FB $117.95 -0.52%
GOOG $695.77 -0.35%
TSLA $233.74 -3.30%


Chart of I:DJI
DOW 17,702.11 -189.05 -1.06%
S&P 500 2,060.02 -21.41 -1.03%
NASDAQ 4,762.9150 -54.6790 -1.14%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs