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Cramer: Outerwall fall big, but not too surprising

CNBC's Jim Cramer said Tuesday investors should not be too surprised by the fall in Outerwall's stock.

"It's kind of amazing it's held up there," Cramer said on "Squawk on the Street" about the parent company of DVD rental kiosk company Redbox.

"I want people to be very careful because, even though they may be right about the theatrical releases, what really matters here is that RedBox has the most powerful competition on the Earth," Cramer said, citing the likes of Netflix and Amazon.

Outerwall's shares plunged 20 percent in early trading Tuesday after the company slashed its 2016 guidance, citing weakness in Redbox DVD rentals.

"While Redbox has driven improvements in both unique customers and total rentals during the first two months of the fourth quarter relative to the third quarter, the business has not met the company's performance expectations and continues to remain challenged by the historically low box office during the third quarter, which was the worst theatrical box office in Redbox kiosks in four years," Outerwall said.

DISCLOSURE: Cramer's trust did not own any of the stocks mentioned in this story at the time of publication.