Coinstar Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Coinstar (Nasdaq: CSTR  ) surged more than 10% in early trading on news of a potential partnership with Verizon (NYSE: VZ  ) in Big Red's bid to compete with Netflix (Nasdaq: NFLX  ) .

So what: Multiple reports now say that Verizon wants to offer a streaming service. Having Redbox as a partner could help Big Red go after not just Netflix but also Amazon.com (Nasdaq: AMZN  ) and DISH Network (Nasdaq: DISH  ) , which also offer Netflix-like on-demand offerings.

Now what: It's too early to predict how well this pairing will play with consumers, but if history is a guide, today's rally is likely to be premature. Do you agree? Would you buy shares of Coinstar at current prices? Please weigh in using the comments box below.

Interested in more information about Coinstar? Add it to your watchlist.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Netflix at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

Motley Fool newsletter services have recommended buying shares of Netflix, Coinstar, and Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 08, 2011, at 10:41 PM, chadscards1274 wrote:

    People don't understand CSTR, this is a company selling at a discount to their growth rate and a company that has beat earnings expectations for 3 straight quarters. Every time CSTR does something right the shorts take it back down. CSTR absolutely gains by NFLX bad press and lost subs, some of those subs will go back to NFLX, but some will choose NFLX for streaming and still choose CSTR for their DVD's. In particular since the Post Office is going to be slowing down delivery times this hurts NFLX DVD by mail model and gives just another reason that CSTR makes good sense.

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