Movie Pass - HMNY

Investment Analysis Clubs Saul’s Investing Discussions
1

These guys are racking up over a million subscribers and this was the must-have x-mas/chanukah present for my kid who is in film school and insists “every kid has to have it”. She goes to the movies all the time.

Going to the movies - giant screen, loud speakers, crowd to react is still a more exciting experience than watching at home, especially for young people. Founder made his bones at Netflix - which could make them ideal acquisition target for the big boy one day. This is pretty much Netflix for movie theaters. Surely it would be fun to watch “Stranger Things” AT the theater. This could be a kind of trial run to see if there’s a there there for NFLX.

As they collect more and more data they may be able to more quickly spot trends and adjust purchasing, promotion decisions with greater speed and agility. The hardest part of making money on films is, of course, marketing.

Seems like there’s something here - a real possible win-win-win all around - for content producers, movie theaters and customers. Without this type of deal movie theaters feel destined for extinction. And there’s countless smaller films that just might find audiences if given an audience. And surely they make money up-selling tubs of popcorn, possibly adding merchandise over time. If actress X wears killer outfits and those could be stocked at theater…

It’s an ultra micro cap at less than 100M, but seems worth a look.

How Movie Pass Plans to Make Money from it’s More than One Million Subscribers
https://www.marketwatch.com/story/moviepass-plans-to-make-mo…

Also, it’s not fair to ask you to care about this, but I do feel my kid has shown solid instincts for spotting trends. She once told me this red-headed softy pants was going to be huge singer. At the time she could pretty much walk up to the stage and say hello. Ed Sheeran turned out well!

1 Like
2

Apology to this fine board for a rushed post.

A quick glance at HMNY, Helios & Matheson - the company that bought a majority stake in Movie Pass - has turned me off completely. They have another product that maps crime in communities and their site claims, “we are big data.”

https://www.hmny.com

This feels like trend-following venture capitalists out to make a buck and not people with a laser-focused passion to reinvigorate the movie business. It was laser focus that built Netflix to a 90B company. The claim “We are big data” is guffaw worthy. I don’t short stocks, but upon further review, this would be high on my list to short the heck out of.

For this board to live up to its potential posts must be far superior to the breathless, harried, e-poo I made in my prior post. I apologize to Saul, the Gardner brothers, the elite posters here, the Fool community, America, Adam Smith and all humans throughout history who ever invested anything in each other. In fact, I feel I should have to pay a fine to the board and lash my own bare back with a belt.

7 Likes
3

Hold off on the lashing, Dan. I will note that Citron had tweeted about HMNY as a short candidate back in the fall, if I recall correctly.

https://twitter.com/CitronResearch/status/918109339897835520…
October 11, 2017: $hmny stock to trade back to $20 Retail investors are warned. You might like product but $1+bill it isn’t. Giving away $1 for .90 no biz

October 12, 2017: https://twitter.com/CitronResearch/status/918546790550515713…
Covering $hmny. Don’t like to stay short companies that are expected to lose money high borrow $ hit tgt price in one day. all timing

October 11th, it got up to over $32/share…October 12th, back down to about $20/share…now over $9/share this morning after trading at a bit above $7/share. This shows that sometimes Citron’s short calls have some merit. In the case of their attacks on Ubiquiti, Shopify, and Hubspot, merit was lacking.

1 Like
4

I agree on MoviePass (HMNY), BroadwayDan.

I owned and operated a movie theatre for 25 years (1985-2010). I still have many sources within the industry.

I’m told the number of customers using MoviePass increases literally every month - if not every week.

MoviePass has now grown their sub base from 1M to 1.5M - in just 30 days.

Do I think MoviePass will save the Film Exhibition industry - especially in its current form/model? Ultimately, no.

Do I think MoviePass will change the industry and prolong its life by many years? Yes.

I can tell you as a former theatre owner, there are MANY slow periods in the movie release year such as: the month of October, the 2 weeks before kids get out of school for Christmas, just after New Year’s, Easter weekend and others. There are also slow times of the week: Mondays, Wednesdays in particular. Then you have times of the day which are slower: late afternoon (think supper time) and the latest showings of the evenings.

MoviePass increases attendance during all these times.

While not every MoviePass customer will purchases concessions, the per-cap (concession dollars spent per customer) and the “concession-to-box office” ratio (concession dollars spent per box office dollar) WILL increase simply due to volume. IF you are a customer who buys popcorn/candy/etc, you will buy more and more often if the movie ticket feels like it’s “free”. I’ve seen it happen with other types of “passes”. Cinemas make the majority of their money on concessions as you may or may not know. This is due to the ridiculously high terms film distribution charges (as a % of every ticket dollar) the cinemas. These terms are usually 70% on the first week or weeks of a release (and can be as high as 90%). The contracts exhibitors sign to play films are changed often by film distributors and usually on a whim…putting exhibitors at their mercy. (Now you know why your popcorn costs a fortune.)

Meanwhile, MoviePass continues to build their algorithm of info gathered on each and every customer each time their MoviePass is used: movie genres, frequency, times of day/week/month, spending patterns, demographics…you name it.

Eventually, MoviePass will have the clout to negotiate better reimbursement rates with theatres via this data and via the fact theatres will owe most of their increased attendance (especially during off-peak times and on non-blockbuster films) to MoviePass. The more MoviePass knows about the cinema customer, the more likely film distribution will be willing to pay for access to this data as well.

I’m a NFLX subscriber and shareholder. NFLX is my largest position. I’m in HMNY at around $6.50. I continue to see MoviePass as a strong potential game-changer for movie theatres.

I have said all along (for 10-15 years), movie theatres will continue to exist in the future, but there will be less of them and most all will offer premium services along with those movies to survive - that, or they will be in a special niche market (such as our local Drive-In here in Maine, which sells out often in the summer season). Historically, we customers have chosen WHEN we will see movies (cinemas, PPV, cable, TV, DVD, etc). What will change in the industry: we will pay for HOW we see them, not WHEN. Ultimately, films will be released in all surviving formats at the same time. How you choose to see the movie will depend on what you want to pay.

MoviePass, again IMHO, will change and refine the industry while extending the life of the local movieplex by filling in those gaps in steady business.

– This…is the MaineReason
Long NFLX, AMZN, HMNY

17 Likes
5

BroadwayDan,

HMNY purchased a majority stake in MoviePass because of the potential they saw. Plans are for them to purchase the rest of the company soon and then roll out an IPO on MoviePass.

I’m still on board with what MoviePass is doing.

– This…is the MaineReason
Long HMNY

1 Like
6

Maine - I like what they are doing but am not a fan of the company. At all. Google the history of CEO Ted Farnsworth and dig into later pages. When the CEO is a dude whose past includes psychic networks, nutraceuticals, energy drinks, multiple accusations of scamming and all sorts of multi-level marketing that is a non-starter for me. Big Data feels like his latest attempt to cash in on a hot trend.

NO bios on the HMNY “our team” Page?
https://www.hmny.com/our-team/

CEO’s track record - 99% Wipeouts (Bloomberg)
https://www.bloomberg.com/news/articles/2017-10-30/man-behin…

I always root for Fools to make money, so I wish you luck. But the flags here are redder than Mao’s bloomers. I’d seriously watch my behind on this one. This reeks of the type of company that runs up revenues at all costs as the founders cash out. I suspect the founders and class action lawyers representing a million kids with dead Movie Pass cards are the only ones who win here.

4 Likes
7

How to make money on this: wait for HMNY to add “blockchain” to the name, then wait for the stock to go up a bunch, and then short.

8

They will remain a losing business model. People who love movies will buy and overuse the pass. Some people will buy and forget to cancel when they don’t use it. Most that try will probably give up, so the profits may never be there. Habits, data, eyeballs won’t matter.

Since the new year began, Eastman Kodak (KODK), Moviepass parent Helios and Matheson (HMNY) and Chanticleer Holdings (BURG), which operates Hooters and burger restaurants, have joined or may join Long Blockchain (LBCC) and Riot Blockchain (RIOT) on the bandwagon. Autonomous Research thinks we’ll see at least 100 “blockchain pretenders” this year.

Wait until it hits $4 again.

1 Like