Blockbuster Lays an Egg

Blockbuster (BBI) shares are down sharply today after reporting another disappointing quarter. While Q4 revenue met Street expectations, adjusted EBITDA came in at the low end of the pre-announced range. The company continues to mull restructuring options, plans further store closings, and has cut capital spending to “maintenance levels.”

The elephant-in-the-living room question is whether Blockbuster is doomed to bankruptcy–and whether the stock is a zero.

Janney Capital analyst Tony Wible, who last month cut his BBI rating to Neutral to Buy, today downgraded the shares to Sell, cutting his price target to 15 cents, from 75 cents. “The accelerated loss of market share, lower cash balance, lack of guidance, and restructuring efforts that could entail significant equity dilution raises concerns surrounding liquidity and/or dilution,” he writes. “We are uncomfortable taking these risks in the face of the volatile media landscape.”

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