Chicken Soup Ex-Ceo Hires Defense Lawyers, Avoids Bankruptcy Questioning

Another once-prominent company may soon be obsolete. Chicken Soup for the Soup Entertainment has officially filed for Chapter 11 bankruptcy protection as of yesterday, July 1. The entertainment company, named for the iconic book, had branched into areas beyond self-help, including owning DVD rental service Redbox. But after an extremely difficult trading year, CSSE stock has bled out almost all its value, falling more than 90%. Now, its race to the bottom is accelerating, as the company’s financial struggles have reached a breaking point, and there seem to be no other options available.

Does the bankruptcy filing mean that CSSE stock will soon cease to exist? Let’s take a closer look at this troubled company and assess what investors should be expecting in the near future.

What’s Happening With CSSE Stock

Granted, at 11 cents per share, CSSE stock doesn’t have much further to fall. But trading has been highly volatile today, with shares mostly trending downward as the market reacts to the bankruptcy protection filing. As of this writing, shares are down 3% for the day, and the stock looks poised to continue trending downward as further negative sentiment sets in.

There’s no denying that things look extremely bleak for this troubled company. According to The Wall Street Journal, Chicken Soup for the Soul Entertainment boasted a debt load of nearly $1 billion and that a group of lenders proved “unwilling to consent to potential refinancings.” When the company acquired Redbox in 2022, its debt burden increased by $360 million. But after the deal closed, things went from bad to worse as CSSE stock began to fall at a time when share prices were already low.

Redbox is a relic of a former era. The company, founded in 2002, gained a national presence at a time when Netflix’s business model centered around shipping DVDs by mail. However, the physical DVD rental market hasn’t aged well, as its owner knows all too well. As the Los Angeles Times reports:

Now Chicken Soup of the Soul’s decision to buy the company may be its downfall. Its long list of creditors includes Warner Bros. Home Entertainment and Sony Pictures as well as retail chains such as Walmart , which host Redbox kiosks.

Why It Matters

It isn’t surprising that Chicken Soup for the Soul Entertainment would be on its way out after the type of year it’s had. Despite a meme stock surge in April 2024 that ended as quickly as it began, CSSE stock has seen no real momentum and has only inched toward the bottom.

Now, it seems that its gradual decline has finally picked up speed, as the company is out of options. For a company that built its brand around helping heal groups of people, CSSE hasn’t been able to heal its own business model.

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On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Samuel O’Brient is a Reporter for InvestorPlace, where his work focuses primarily on financial markets, global economic trends, and public policy. O’Brient writes a weekly column on recent political news that investors should be following.

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Pre-market stock movers are worth diving into this morning as we break down all of the biggest news sending shares higher and lower on Tuesday!

Moving stocks this morning are a bankruptcy filing, earnings reports, new deals and more.

Let’s get into that news below!

Biggest Pre-Market Stock Movers: 10 Top Gainers

• Chicken Soup for the Soul Entertainment stock is rocketing more than 222% after falling yesterday on a bankruptcy filing.
• Chicken Soup for the Soul Entertainment, Inc. – 9.50% Notes due 2025 are soaring close to 82% after yesterday’s drop.
• Roadzen shares are surging over 60% alongside its first public year-end earnings.
• IMAC stock is gaining more than 37% without any clear news this morning.
• Versus Systems shares are rising over 31% after naming an interim CEO.
• Zapp Electric Vehicles Z stock is increasing 30% despite a lack of news this morning.
• Chicken Soup for the Soul shares are climbing more than 19% with its bankruptcy filing.
• Ocean Power Technologies stock is heading over 16% higher alongside heavy pre-market trading.
• US Energy shares are jumping more than 14% on a new acquisition deal.
• VS Media V stock is up over 14% this morning.

10 Top Losers

• Conn’s stock is plummeting nearly 35% despite a lack of news this morning.
• Nukkleus shares are diving almost 15% without any apparent news today.
• Applied DNA Sciences stock is tumbling close to 12% without any news to note.
• Senti Biosciences shares are taking a more than 11% beating after a cancer funding rally yesterday.
• Datasea stock is sliding close to 11% after rallying yesterday on sales agreements.
• Presto Automation shares are falling over 10% despite a lack of news this morning.
• SAI.TECH Global stock is decreasing more than 10% without any news to report.
• Hudson Pacific Properties shares are dropping over 10% despite a lack of relevant news today.
• Vintage Wine Estates stock is slipping more than 10% this morning.
• Akso Health shares close out our pre-market stock movers down over 10% today.

On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Consumer stocks were mixed late Monday afternoon, with the Consumer Staples Select Sector SPDR Fund (XLP) decreasing 0.7% and the Consumer Discretionary Select Sector SPDR Fund (XLY) adding 0.4%.

In corporate news, Li Auto shares jumped 7%. The company delivered 47,774 vehicles in June, a nearly 47% increase from a year earlier.

Chewy shares reversed early morning gains after a regulatory filing showed that meme stock influencer Keith Gill, known as "Roaring Kitty" on social media, has a 6.6% stake in the online pet store. Chewy shares fell 6% in recent trading.

Chicken Soup for the Soul Entertainment filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware on Friday, according to a notice on the court's website. Its shares plunged 41%.

Birkenstock is executing its direct-to-consumer expansion strategy better than expected, UBS Securities in a report. UBS upgraded the footwear maker to buy from neutral and raised price target to $85 from $52. Birkenstock shares rose 2%.

Consumer stocks were mixed Monday afternoon, with the Consumer Staples Select Sector SPDR Fund (XLP) shedding 0.4% and the Consumer Discretionary Select Sector SPDR Fund (XLY) rising 0.4%.

In corporate news, Chewy shares reversed early morning gains after a regulatory filing showed that meme stock influencer Keith Gill, known as "Roaring Kitty" on social media, has a 6.6% stake in the online pet store. Chewy shares fell 5% in recent trading.

Chicken Soup for the Soul Entertainment filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware on Friday, according to a notice on the court's website. Its shares plunged more than 44%.

Birkenstock is executing its direct-to-consumer expansion strategy better than expected, UBS Securities said Monday in a report. UBS upgraded the footwear maker to buy from neutral and raised its price target to $85 from $52. Birkenstock shares rose 2%.