Blockbuster, once known as the go-to place for DVDs and other entertainment rental needs, has taken a nice beating over the last few years from Netflix.
But now Blockbuster seems to be silently making its way back into the marketplace. The fiasco of high late fees far behind them, Blockbuster is now promoting DVD rental plans that offer the online ordering capabilities of Netflix and leveraging their brick and mortar stores by providing the alternative to return DVDs to a regular store along with instant exchanges.
What this means is that, at a similar price point, Blockbuster’s offerings are now better than Netflix and you can avoid the hassle of mailing DVDs.
Most Blockbuster stores have been given an extensive facelift with more emphasis on HD entertainment and console games. All of these efforts along with selective advertisement on the internet looks like Blockbuster is on its way back to reclaiming top position. Whether this actually happens, remains to be seen but what this means for us is:
An opportunity to pick up Blockbuster shares on the cheap (BBI). At about $2.50 per share, I see can see this stock going to atleast $3.50 in the near term. While this company has plenty of debt, it has the cash flow necessary to service the debt and has seen increased same store sales and profitability over the last quarter.
Overall, the company is profitable. On the extreme side, the whole company could be a buyout candidate. One more thing billionaire activist investor Icahn holds a lot of ‘BBI’.
Part of the draw of BB’s offering, to me at least, is the ability to exchange movies in-store a certain number of times (or unlimited!) with certain Netflix-killer deals they have. The bummer is that, last I checked, the unlimited exchanges package was $35 (when they kicked off the whole thing.)