Craig-Hallum downgrades Chicken Soup for the Soul to Hold, cuts target to $1

As previously reported, Craig-Hallum analyst Jason Kreyer downgraded Chicken Soup for the Soul to Hold from Buy with a price target of $1, down from $8. Chicken Soup for the Soul acquired Redbox a year ago with the goal of rapidly scaling its digital business and building a retail arm poised to ride a wave of content coming back to theaters. For a plethora of reasons, many of these opportunities failed to emerge, resulting in a major restructuring to accelerate profitability, the firm says. While Craig-Hallum believes these are the right moves, it questions whether this is too little too late given the balance sheet overhang. At the same time, the company announced the formation of a committee to evaluate strategic alternatives given interest from financial and strategic counterparties. The firm continues to see value in Chicken Soup for the Soul assets but views these as overshadowed by a highly leveraged balance sheet, and unlikely to see investor appeal until profit begins to inflect.