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Redbox is no Netflix: Coinstar stock plunges

February 8, 2013: 12:01 PM ET
Redbox is trying to compete with Netflix in streaming video. But investors are worried about a weak outlook from the company's parent Coinstar.

Redbox is trying to compete with Netflix in streaming video. But investors are worried about a weak outlook from Redbox owner Coinstar.

Redbox is not Netflix. And Redbox parent Coinstar (CSTR) clearly doesn't have the momentum of Netflix's stock.

Shares of Coinstar tumbled 8% Friday after the company issued a much weaker-than-expected earnings and sales forecast for the first quarter late Thursday.

But Netflix (NFLX) has nearly doubled this year while Coinstar is down year-to-date and is closer to its 52-week low than its 52-week high.

That's why some traders on StockTwits were labeling the Coinstar sell-off as an overreaction.

$CSTR seems overdone

$CSTR moving upward. P/E ratio 10. Analyst rating: BUY. Good growth going forward.

True. Coinstar does look cheap. But this is a company that does have a history of raising and lowering forecasts. It's getting harder to take the company's guidance at face value. That's never a good sign.

Still, others felt that the company will turn it around.

$CSTR nice intraday base here could see a pop here after 10:30 short covering on into the wknd. Valuation cheap. Biz model on track its a GO

$CSTR call: things that help 2013 Bluray, better CRM, RedboxInstant, Canada, add kiosk capacity/utilization

Coinstar has a lot riding on the Redbox Instant streaming video service, which Coinstar has developed in partnership with Verizon (VZ). Some investors clearly think that this will be a strong competitor to Netflix. But the outlook from Coinstar seems to tell a different story.

$CSTR gave poor guidance, good for $NFLX. Let's see how that is digested and spat out on the premkt tomorrow.

So $CSTR RedboxInstant is like $NFLX without the original content, oooooooook, that's gonna work great

I still think Netflix is overvalued and that Coinstar is a cheaper play on streaming video. But Netflix does deserve credit for realizing that streaming video is simply a commodity business unless you give subscribers a compelling reason why your service is different than others. The Kevin Spacey show "House of Cards" does that. Ditto for the eagerly-awaited return of "Arrested Development." Kudos to Netflix for resurrecting the saga of the Bluths. It's an illusion!

And now it's time for the Reader Comment of the Week. Apologies to all of you who do not live in New York, New Jersey, Connecticut or Massachusetts and are probably sick of hearing about Nemo, aka the Snowtastic Blizzardgeddon Nor'easter of the Cenozoic Era!

Yes, this is going to be a bad storm. And I sincerely hope everyone in New England hunkers down this weekend and is okay.

But let's have some perspective. There are places around the world where large amounts of the powdery white stuff routinely fall from the sky every winter. And they just suck it up and get on with their lives. My wife is from Buffalo. Western New York (don't you dare call it "Upstate") always gets slammed with lake effect snow. Another reader who hails from Central New York was also taking this storm in stride.

Ha! So you're saying this is just a dusting? Maybe that's why snow removal equipment maker Douglas Dynamics (PLOW) was flat Friday. Love that ticker. Call Mr. $PLOW. That's my ticker. That ticker again, is Mr. $PLOW! (Barney should get started on a Plow King IPO. Thanks to the JOBS Act, it shouldn't be too hard.)

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Paul Lamonica
Paul R. La Monica
Assistant Managing Editor, CNNMoney

Paul R. La Monica is an assistant managing editor at CNNMoney. He is the author of the site's daily column, The Buzz, and also tweets throughout the day about the markets and economy @LaMonicaBuzz. La Monica also oversees the site's economic, markets and technology coverage.

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