Coinstar (CSTR) Surges 20% As Consumers Scrounge Up Change
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Coinstar (Nasdaq: CSTR) is surging 20% today as consumers take their loose change to Coinstar's machines located throughout the country. Coinstar offers a range of services, but in this economic environment, Coinstar's self-service coin machines seem to be rather busy.
As consumers exhaust their credit cards and saving accounts, the next place to look for money is at the home. First, consumers may sell goods on sites like eBay (Nasdaq: EBAY), and next they may gather up all their loose change and take it to coin processing machines Consumers will look under couches, seat cushions, break piggy banks to gather up as much change as possible. After they have gathered up the change, they need to convert it to physical dollars and that's where Coinstar's popular coin counting machines come in and are likely a reason for Coinstar's higher guidance.
Today, Coinstar guided its Q1 above even the most optimistic Wall Street view, expecting revenue of $260 million to $270 million versus the consensus view of $247.6 million. Coinstar also lifted its full-year revenue guidance from $1 billion to approximately $1.3 billion.
Coinstar benefits from the trend of consumers turning to cash as credit disappears. As more people face this tough economy, Coinstar will likely benefit from the increased use of its machines.
The shorts say that Coinstar is in a tough business and the risks are too plentiful to own this stock. Shorts argue that regional banks will install their own coin counting machines and let customers use them for free. However, that has not been a pervasive trend among banks, and as banks look to cut costs, I doubt this will ever happen. The shorts next argument is that the US will phase out the coin, which would result in less need for Coinstar's services.
To the shorts, you can keep hoping, while Coinstar continues prints coin on a daily basis.
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As consumers exhaust their credit cards and saving accounts, the next place to look for money is at the home. First, consumers may sell goods on sites like eBay (Nasdaq: EBAY), and next they may gather up all their loose change and take it to coin processing machines Consumers will look under couches, seat cushions, break piggy banks to gather up as much change as possible. After they have gathered up the change, they need to convert it to physical dollars and that's where Coinstar's popular coin counting machines come in and are likely a reason for Coinstar's higher guidance.
Today, Coinstar guided its Q1 above even the most optimistic Wall Street view, expecting revenue of $260 million to $270 million versus the consensus view of $247.6 million. Coinstar also lifted its full-year revenue guidance from $1 billion to approximately $1.3 billion.
Coinstar benefits from the trend of consumers turning to cash as credit disappears. As more people face this tough economy, Coinstar will likely benefit from the increased use of its machines.
The shorts say that Coinstar is in a tough business and the risks are too plentiful to own this stock. Shorts argue that regional banks will install their own coin counting machines and let customers use them for free. However, that has not been a pervasive trend among banks, and as banks look to cut costs, I doubt this will ever happen. The shorts next argument is that the US will phase out the coin, which would result in less need for Coinstar's services.
To the shorts, you can keep hoping, while Coinstar continues prints coin on a daily basis.
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