HMNY is a total garbage stock – badly mismanaged with a botched strategy, horrible execution, and totally lame marketing and PR. They have a criminal like CEO who is both stupid and dishonest. They are regularly out foxed and out executed by competitors, and they make it seem impossible to find new productive partnerships.
Add to that that they execute so slowly for a startup you would think they were a 100 year old company.
And finally they have been shedding customers on purpose at a rapid rate. That part is only partly bad. The company was so f’d up they had to fire 1/3 of their customers to stay alive!
Add it all up and this stock is just total garbage and that is why the market pounded the stock to oblivion. I have never seen a bigger shit show for any stock- ever. Pets.com was better than these idiots. Sears was likely better- even into bankruptcy.
All that said – the salvage value of this heaping pile of shit is likely more than the measly $32-34 Million Market Cap range the stock is trading for today.
Rumors of acquisition have been floating. That makes sense. There is value here. Last reported the company had $65M left from its scammathon ATM offering, that now by the grace of god is over. It also slipped out that there are still 2.1 Million suckers still left paying for the almost impossible to use service.
Oh to be fair- I am still a member- and if I use it once a month it has value.
If you value the subs at $30 each (and that’s pretty cheap) that is $60 Million. Let’s say the cash is down to $30 Million left. They probably have at least $10 Million in accounts receivable. That’s $100 Million with zero goodwill and zero value for the tech, patents and TM’s.
A $100 Million buyout is peanuts for any real company. Hell you could just take the cash, milk the subs and give them even shittier service and skim more cash until they all finally quit. It would be worth more than $100 Million.
So yes- this total pile of horse pucky is undervalued as an acquisition target no doubt.
The issue is that this stinker is still run by an idiotic CEO who is a loser, a guy who wants to play in Hollywood with your money. His best asset was that he was able to befriend Mitch Lowe with promises of money to deliver his vision, which of course he could never deliver on. Subsequently, he ruined Mitch’s reputation and drove the entire ship straight into a toxic iceberg.
Will the stock go up from here? Depends on how addicted Ted is to his own crack. He is a big enough sociopath to screw up an acquisition with a poison pill. He does not want to leave his pretend Hollywood job to go back to peddling another loser penny stock. So expect him to continue being a total drag on the stock and a huge impediment to any possible deal. Nobody will want Ted to stick around post an acquisition, even Stupid Ted is smart enough to know that.
So it is no sure thing that any acquisition will happen, but with the price so cheap, and the RS possibly at risk, it could force Terrible Ted’s hand.
Is it worth loading up here? Probably not. Am I selling. No- I am waiting out the 5 years I promised in the past.
There was a very strong market reaction to Ted Farnsworth announcing he had secured $65 Million in “Financing” for Moviepass today. Farnsworth also boasted that Bankruptcy was “off the table”. He continued to state that he is looking for acquisitions and to find new ancillary revenue opportunities.
Can we believe Ted this time. Unfortunately, probably not. Ted has proven too many times that he gets confused about what “securing finances” really means. Because the company won’t comment on who, how or why anyone would give them additional financing, it seems very unlikely that there is any new real support. It is possible the company stuck another toxic deal for shareholders with Hudson Bay, and combined with some further dilution from their long running ATM offer they may have $65 Million in the bank. But if the history even rhymes with what we are going to find out about this new round of financing, get ready to find out the worst deal you can imagine for common stockholders. It’s simply the way Ted does business.
If somehow Tee did pull a hat trick and secured a reasonable debt deal, that would be a great thing for the company. I doubt that happened however, as Ted said the company still has no debt. Or maybe they do now? Who knows – this is Ted we are talking about here.
At any rate. The big jump from today is probably NOT going to last, and almost certainly won’t survive another big reverse split. If there is no other news than Ted haplessly announcing more toxic deals with sharks like Hudson, you can forget any long term rally.
If there is new real sound financing. Why would Ted and company not issue an official statement? Why would there be no SEC filing? It makes no sense. Yet nothing at HMNY ever makes sense.
I guess one silver lining. If he does have $65 in the bank now, that is nearly 3X the market capitalization of the company.
Unfortunately, even with all that, Ted will likely find a way to piss that money away faster than you can say reverse split!
I hope I am wrong, history says I am right. I hold my slightly less worthless shares, praying the company will find a way, and get rid of Fraudsworth.
It’s impossible to say anything other than Farnsworth is a total scam artist.
I am officially done with HMNY and with Ted Farnsworth.
The ONLY hope – and there is pretty much zero hope left now – is that Ted gets sacked- or that Moviepass posts some kind of big surprise.
The chances of either happening are probably less than being struck by lightning.
I now recommend staying away from the stock.
It’s time for me to accept that this stock is a scam. And I don’t want to risk having others get hurt by this scam.
My only advice here is to stay away – even from the lotto ticket idea. You are likely just throwing away your money.
It is with deep sadness and regret that I have come to this conclusion. I was such a deep believer in this company, the idea, and the potential to change an industry for the good.
It’s not just losing money that hurts here. It is the fact that I decided to pick this stock of all stocks to get behind and to write about.
It’s crazy for me to even think about it. I am mostly – 95% plus – an index ETF investor. I don’t like penny stocks and never intended to be involved with one at all. That I picked this stock with a lying thieving CEO, an idiotic management team, and a cavalier toxic view against shareholders absolutely sickens me. It is toxic – so I am done.
I believe a better and more honest management team possibly could have pulled this off. But for HMNY it was not to be.
In full disclosure – I am going to hold the shares I have for the 5 years I committed to earlier. I have about 4 more years to go. With this next RS it will be a minuscule number anyway. And I suppose if they go BK before that I can take the tax loss when it happens.
I may poke my head up and write something if there is a really big new development on the positive side. Otherwise this is my last post on HMNY.
So with that – my final apology for those who caught HMNY fever from me or with me. It was fun dreaming, and an interesting case study. Ultimately it was a case study of how management can and will lie to stockholders for their own personal gain.
Motley Fool has helped more people lose money than just about any site out there, they are pumpers, dumpers and make horrible calls on a regular basis. I called it quits with Motley Fool after they made multiple very bullish calls on 3D Printing Stocks. I was a sucker and believed the hype on that one. Not that 3D printing isn’t amazing and holds a bright future. They were just bad picks and bad timing for Fool readers.
The fools and the Fool pumped these dogs like crazy, the hyped never delivered. I have seen the Fool website be wrong so often, I can hardly recall a time where they have been consistently right.
Now, of course, I have to acknowledge I have been wrong on HMNY to date. I get it! My call on Moviepass sucked even worse than Fool’s call on 3D printing! But I must say, it is a bit different here. These were established companies with years of revenue and profit behind them. While by no means were they “safe” investments – you don’t expect to see the bottom fall out of companies of this size, with such huge projected growth.
OK – on to the matter at hand. Motley Fool contends 3 Reasons AMC is “winning” of Moviepass. Let’s take a look at each claim.
Claim #1- AMC can do Marketing in their own theaters. That is true, AMC owns the theater, and they can promote whatever they like on their screens. Now, does anybody think for a second that Moviepass has a hard time getting publicity? No- me neither. Unfortunately, as of late, most of that PR has been negative. I fully expect that when Moviepass turns the corner, the PR will change for the positive, and will do so with a massive comeback kid story. The amount of free marketing that Moviepass has received as a startup has been nothing less than mind-blowing. There are still plenty of people who loath AMC for being hyper negative and aggressive against Moviepass. If Moviepass does make a comeback I expect the free PR to continue. If they continue to grow larger than AMC – expect the press to start covering Moviepass as the leader and innovator in the space.
Claim #2 – MoviePass has devalued itself this summer. Hard to argue that Moviepass didn’t have to change their plans to kill the hogs and abusers. And the summer was obviously a rough ride. But does that really mean AMC is winning? I agree that heavy users who have a viable AMC option can see more movies for less on the AMC plan. As many have argued, AMC actually did a great service to Moviepass by sucking away a big chunk of the most costly Moviepass users. It was like a gift to Moviepass. They could not get rid of these people fast enough. Remember – AMC has something like 23% market share – the vast majority of the moviegoing public does not have a good or viable AMC theater option available to them. Customers like choice, and having the option to choose whatever theater they want to go to remains a valuable feature for most moviegoers.
The most important point here is that most people don’t see more than 3 movies a month. They simply don’t have the time or the desire to go to the movies that often. So why pay twice as much to lock yourself into AMC if you really don’t see yourself going all that often as a casual moviegoer. And that is the key, Moviepass wants to get the casual moviegoer, they guy or gal who normally sees around 4 movies a year, and try to get them to go more like 8 times a year. This is where the business model works the best. And it works best here for a few reasons. First, because it keeps utilization rates lower for the Moviepass subscriber base – which helps keep COGS down. Second, this group of casual moviegoers is attractive to Hollywood for marketing purposes. Heavy moviegoers are great for Hollywood, and Hollywood loves them. But for marketing purposes, when you are trying to move the needle on a film, getting the next group down from heavy users is really important. It is sort of like going after swing voters in an election. You spend your money on those who are undecided, who might not bother getting off the couch and going to the theater. The guys that go all the time, they will likely show up anyway, the casual user, they need a little more prodding to get them to turn up to the theater. This makes that casual group a sweet spot for Hollywood to deals with Moviepass to push that group to go see a particular film. If Moviepass can keep their numbers in the millions, and use their Moviefone audience to push audiences to certain shows, it will be an advantage over AMC.
Claim #3 – Sustainability “The fatal flaw with MoviePass’s original model is that it doesn’t have full control of its input costs. It has to pay retail for the movie tickets it’s buying for its members, and that easily adds up to more than $9.95 a month.” This reasoning has been claimed over and over again by the bears and bashers. When the service was unlimited and had a lot of really heavy users, the argument held a lot of merit. Now the argument is much weaker. It is true that Moviepass has been slow to get to deals with theaters – they have admitted as much. But it is a lot less clear that having physical assets is a big strategic advantage in today’s marketplace. The argument that “controlling all the operations” is a big winning strategic position seems like an idea from yesteryear. You don’t see Uber very concerned about not owning the Yellow Taxi companies. You don’t see AirBnB very concerned about not owning hotels, resorts, or vacation homes. Even lowly Amazon seems fine not holding all the inventory for items they sell online. The argument that Moviepass can’t be successful without owning the theaters seems suspect, if not downright ridiculous.
Final thought. With the recent changes, Moviepass is not playing a very classic disruptor role. Moviepass is now IS NOT for the high-end heavy user, and that is a GREAT thing. It follows the disruptive innovation model much closer with the new plan.
The offer from Moviepass is now a classic move of coming in at the very low end. They are offering a lesser service for a low price, that only appeals to the lower end of the market. Naturally, this market and these customers are less appealing to established players like AMC. AMC is looking to maximize profit and to do that they look to create more margins by offering fancier options to their most loyal customers. In fact, it actually makes perfect logical sense for AMC to ignore Moviepass as they move into the low end of the market where there is little profit to be had. From AMC’s perspective, the logical move is to move higher upmarket and leave the low-end low-profit space to new entrants. This is classic disruptive innovation. None of this is to imply that AMC is purposely doing something wrong or stupid. AMC is trying to save and optimize their profits – that is what management is SUPPOSED TO DO! It will feel to AMC and some others that AMC is actually winning. But what they are missing is that the incumbent just allowed a new entrant to get a toehold in their marketplace.
What naturally happens after a new entrant moves into the low end of a market is they continually innovate and find new ways to move upmarket and take increasingly large pieces of the market. At the same time, the incumbent keeps trying to optimize more and more upmarket in an ever increasing race to find fatter margins in the highest end of the market. Eventually, time runs out for the incumbent and they are overtaking by the new entrant. This pattern repeats time and time again across multiple markets. Steel, Automobiles, TV’s, Computer Chips, – even Netflix vs. Blockbuster and then HBO, –and many more industries have experienced this exact phenomenon. There is really no reason to believe that moviegoing is immune from this well know theory.
Moviepass even with all of its hassles continues to be a great deal. That much is obvious when considering that for $9.95 a subscriber can save money by going to the theater just one time, and if they use the subscription to the max, they can get somewhere around $30 to $50 in value depending on when and where the pass is used.
I thought it might be fun to compare Moviepass to other ways consumers might blow their cash to entertain themselves. So here’s a short list of of entertainment options compared to the value of Moviepass…
We could go bowling… as Gaffigan says. But bowling these days is generally around $20 or more per bowler. For that you could buy 2 months of Moviepass and go out to the movies up to 6 times.
If bowling is not your thing – how about golf? Apparently the average green fee is around $34 for a public course. But you have to have clubs and the fancy pants and shoes to really get out there. For that you get 3 months of MP or 9 Movies. And you would have some money leftover to buy a popcorn and a drink!
Golf a little slow? How about a day skiing? According to “Snow Online” the average cost of a lift ticket in the US is now up to $94. And if you think movie concessions are expensive, try ski lodge concessions! And don’t forget the 2 hour drive, the expensive equipment rental or purchase. It’s enough to make you want to just go see a movie! And for that price, you could see at least 27 movies or have 9 months worth of Moviepass! With plenty left over to take a friend or two or three!
Maybe you prefer to do something less active? How about a concert? Well we all know that is going to set you back some real money. For good seats at a good show we are talking about $120. Or a full year of Moviepass, or 36 movies! Now that’s a lot of entertainment hours by comparison:-)
Well, how about a Broadway show! Turns out that is going to hit your wallet hard as well. According to statisa that will be $127 big ones!
Do you like Speed? How about a day at the races? NASCAR perhaps? Average ticket there $96.14. Plus parking, plus a LOT of hassle getting in and out. Let’s just call that about a year of Moviepass again. And that is being kind on the hassle charges.
How about an NFL game? Forget about it! No matter where your favorite team plays – it’s more than a full year of Moviepass!
We can talk about other entertainment options that are cheaper than Moviepass. Going on a walk is free! Sex can and should be free! You can share a Netflix account for less. Or you can buy a digital TV antenna off Amazon for about $30 bucks and get your locals for free!
Let’s face it, the cost of Moviepass is super low, and it is a fantastic value compared to just about any other entertainment option.
So as we sit and ponder if Moviepass subscriber numbers will flame out or continue to grow under the new 3 movies a month value proposition. It’s worth considering, do consumers have a lot of better options for the money?