Blockbuster shares rise 40% on Monday
Investors gaining confidence retailer won't need banktruptcyThe hottest stock in entertainment in the past week has been woeful Blockbuster, up 40% on Monday and 87% in the past three trading days.
The stock is up on massive volume as well -- 56 million shares on Monday compared with the 8 million average -- but not much discernible news.
Apparently investors, and at least a few speculators, are gaining confidence that Blockbuster won't need bankruptcy to crawl out from under its almost $1 billion debt.
They also might be getting comfortable with the idea that Blockbuster won't be delisted from the New York Stock Exchange for having too small a market cap. As of Monday, it was $118 million, higher than NYSE's minimum standard.
Blockbuster said Friday that it has rescheduled its shareholders' meeting from May 26 to June 24. The extension will help the company "complete one or more of our ongoing recapitalization initiatives prior to the annual meeting, possibly resolving our NYSE noncompliance."
Blockbuster's shares closed at 56 cents Monday, and the company is contemplating a reverse stock split to raise the price of each share, which also is something NYSE would like to see because it generally is not keen on penny stocks.
Investors might also be eyeing the studio deals Blockbuster has been striking that give it a four-week head-start over Redbox and Netflix for renting new-release DVDs.
And Blockbuster's kiosk venture with partner NCR is on track to close out June with 7,000 kiosks and end the year with 10,000. And in June the kiosks will begin selling new releases, complete with shrink-wrapped packaging,
Blockbuster's highflying stock of the past three days is a stark contrast from its first quarter, when it sunk 62% and was the worst performer among the 50 stocks that make up The Hollywood Reporter Showbiz 50 index.