Why Redbox Entertainment is growing today

what’s happened

Film rental company promotions Redbox Entertainment (RDBX 46.88%) countered the selling going on in the broader market, climbing 34% at 11:25 am ET Friday.

Where Dow Jones industrial index decreased by 741 points, or 2.3%, and S&P500 down over 108 points, or 2.7%, Redbox rose $3.22 a share from yesterday’s close to $12.69 a share.

So what

Redbox has become the latest meme share celebrity after short interest in its shares soared to 210% in circulation. This has been a hallmark of many of the favorites of the meme stock market – an unusually high percentage of short positions, which encourages small retail investors to invest in stocks in the hope of causing a short squeeze.

It’s certainly better to hope for than the completion of the deal to acquire Redbox. Chicken soup for the soul (CSSE -3.69%), since movie rental investors will receive 0.087 shares of Chicken Soup for the Soul for every Redbox share they own. This valued the stall owner at approximately $375 million, including $50 million in Chicken Soup for the Soul shares and an alleged $325 million debt of Redbox.

The market capitalization of Redbox is currently almost $446 million.

What now

The deal will almost certainly be completed as virtually all of the investors in both companies have signed an acquisition agreement. The short squeeze may allow some investors to cash out early for more value than what they would get from the buyback. The main thing is not to be the last one to hold the bag.

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