Chicken Soup for The Soul Entertainment Faces Challenges

Chicken Soup for The Soul Entertainment (CSSE) experienced a significant drop in its stock prices and hit a new all-time low after reporting disappointing second-quarter revenue. The company has been grappling with mounting debt since its acquisition of DVD-rental kiosk company Redbox in 2022.

On Tuesday, CSSE's stock plummeted by 47% to 54 cents per share. Year-to-date, the shares have witnessed a staggering decline of over 95%.

Based in Cos Cob, Conn., Chicken Soup has been working diligently to improve its cash flow in anticipation of upcoming debt payments, which are scheduled to commence next year.

As of June 30, CSSE's debt stood at $511.9 million, a notable increase from $479.7 million as of December 31. Meanwhile, its cash and cash equivalents dwindled to $6.9 million from $18.7 million during the same period.

CSSE's second-quarter revenue came in at $79.9 million, up from $37.6 million a year ago but falling short of analysts' expectations of $120.1 million, according to FactSet.

During a conference call with analysts, Chief Executive Bill Rouhana acknowledged that Redbox sales haven't picked up as anticipated this year. In response to inbound interest regarding certain assets, the company's board is forming a "strategic review committee."

Analyst Brian Kinstlinger from Alliance Global Partners downgraded CSSE's stock rating from buy to neutral due to uncertainty surrounding the recovery of the Redbox disc-rental business amid ongoing Hollywood labor strikes.