Model Update Post CEO – Ted Farnsworth Fox Business Interview

In Today’s Fox Business Interview CEO Ted Farnsworth claimed that the Moviepass subscription businesses is now break even.

Specific numbers Farnsworth claimed in the interview.

  • Utilization Rate is now at .9
  • Approximately 10% of yearly subs quitting.
  • Did not give monthly sub retention rate.

If you believe Ted’s #’s – and the prior numbers given for non subscription revenue – it does appear that the company is very close to breakeven. And on the sub basis alone, they should be showing a positive gross margin. I used $11 for a average ticket price. Which is higher than MPAA estimates.

I dropped the subs to 2.6M and built back up from there.

Here’s the model. Things are looking pretty good!

Moviepass Hiring New CMO

Update! They are at least trying to put a stake in the ground! Here’s Ted with an update from Fax News.

Video Link

Ted does his best to defend HMNY and points to progress on profitability on subscriptions alone. He goes just short of saying they have hit profit for subs.

As I have mentioned before – Ted is a terrible interview. He constantly says. “You know” and “I think”. And he is loose with hard facts and numbers. This is a CEO in desperate need of media training. I have worked with a lot of C-Level spokespeople. Ted is really terrible at this game.

Ted is so bad in fact, I think it discounts the stock significantly. If Moviepass does survive, and I think it will, I see no chance Ted will survive as CEO. He is just not smart or good enough for the job. The guy is in way over his head, and it shows.

He did slip out one interesting tidbit in the interview saying the yearly sub drop rate was 10% at the flip. He acknowledges Sinemia and offers nothing other than they are a smaller company. Not exactly a reason to buy Moviepass, but a true statement.

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Moviepass is hiring a new CMO, and all I can say to that is – Thank the lord! They need some real help with PR, Branding and Messaging. They seriously can’t hire this job fast enough.

Here’s some free advice to whoever lands the role. You are welcome!

Moviepass needs to go on a offensive PR campaign. The company should update their subscription numbers, and should provide update on cash burn and dilution expectations.

Until then, the only PR they can expect will be negative news. Like a beaten down celebrity or politician, who’s career may be shattered by scandal, the company needs to air out ALL of its dirty laundry, and communicate its plans more clearly for rehab.

I talk to people all the time about Moviepass, I am not shy as you can imagine, and the number 1 thing I hear as an objection to trying Moviepass is “I heard they were going out of business”. People generally think the 3 movies a month deal is great. But they don’t want to bother with a company that is dead man walking. It is a death knell for new customer trial, and it is also killing the company’s reputation more broadly.

The only way Moviepass will be able to overcome this is with a full on PR Blitz. They should underpromise and then overdeliver on a sub announcement. I still believe anything north of 2 Million Subs would serve as a relief to investors and would be confidence from the press.

The company should come clean on dilution and expected outstanding shares for end of year. Even if the number is scary large, they should remove the uncertainty.

The company appears to actually be improving execution, with new deals yesterday with Postmates and Draft Kings- both hot companies with young audiences. So I am assuming they are having some luck convincing these companies that they are going to stay in business.

Why not try and convince the general consumer audience of the same thing?!

Look at the news coverage from yesterday- nobody picked up the positive PR on the new deals, all the coverage was on Schramm scam. It was just more reinforcing to consumers that the company is dying.

Good luck to whoever lands the new CMO job. You got your work cut out for you!

Bobvisse.com Hits More Than 13,000 Visitors and Over 28,000 Views This Month! Thank you for Visiting!

This blog has seen some tremendous audience growth over the past few months and this month we hit a new record! Almost 13,500 visitors have come to the site this month! And it has been amazing to see the traffic grow bit by bit each week.

I want to thank all of you for coming! I truly appreciate it!

It’s really cool for me to see how Worldwide the audience has become. I love the power of the Internet! Here’s a breakdown of the top countries this month.

I started this blog as a hobby and as a way to try and help others achieve financial freedom.

Completely by accident, the biggest part of the blog has been centered on HMNY and Moviepass. That was never my intention with this site at all. I was planning on writing about strategies to achieve financial freedom – but the popularity of the Moviepass story just sort of took off. I enjoyed the story and felt like it made for compelling posts. And so far the audience has agreed. It has been a fun experience. I have met some great people and learned a lot along the way.

I am sure the fascination with Moviepass will die out soon enough, but in the meantime I intend to keep writing about it as the story continues to be interesting and I still believe there is great possibility in the name.

I am also going to start putting more time into finishing my book about my Microsoft experience. Much of my experience there is directly relevant to the Moviepass story. In addition, for young people there is a lot of advice on career management, and how to advance in a technology company. It is my sincere hope that at least some people will benefit from my story there.

I owe it to my readers to spend more time talking about diversification, how to setup a portfolio that can be resilient even when circumstances turn ugly. Some of that may be boring, but I hope useful for people who are just getting started with investing. As a side note, it saddens me that a lot of people lost money on HMNY and it was the only stock they held and may have used this site to get to that decision. That’s a cruel way to be introduced to equities. If that happened to you, please know I am very sorry, and HMNY has been a wildly unusual stock. Please don’t let it take you out of owning stocks for your future, that would be a really bad outcome.

I know a lot of people hate my writing style. I get a TON of complaints about that. I know I could use a good editor to clean up my posts. I apologize for the misspellings, bad grammar, run on sentences and other atrocities on the English language. My college lit professor would be mortified I am sure! I write most of my posts from my phone, as I am always on the go and WordPress makes phone editing really easy, but mistakes happen!

One last note –I disabled comments on site – most of the comments were purely spam and those that were not tended to be really nasty hate email, which I don’t have time for!

Should you ever want to contact me directly- give me a shout on Twitter At @bvisse

I love talking to folks about stocks, investing, Moviepass and financial freedom!

Thanks so much to everyone who has visited the site, it has made this little hobby a real kick in the ass!

Carl Schramm Resignation from HMNY

This is the other Moviepass news of the day. A disgruntled board member called it quits today.

Carl Schramm who is an economist and is mostly an academic but also masquerades as an entrepreneur pulled the ejection button on HMNY.

In a bit of twisted irony he is currently writing a book called “Burn the Business Plan: What Great Entrepreneurs Really Do

Maybe he became a little disappointed with the process of entrepreneurship – Teddy and Mitch gangster style. Who knows?

It was well known that Schramm was on the outs with Ted and others on the board. He was a swing voter, and he was getting pulled in both directions, he didn’t like it, And he did not like the potential damage it was doing to his reputation.

When things are really tough, being on a board sucks! I know as I have been there! What people don’t really understand who have not done these roles is that board members can often end up as enemies of the current management. When things go really South, like they have for HMNY, the board gets the blame, even if they disagreed with management’s strategy. Even worse for BOD members, they risk getting sued- PERSONALLY! That’s right, if you sit on a board, and the company gets sued, you can have personal liability. This is why most companies buy BOD insurance, to protect board members from this risk.

Schramm did a nasty by quitting in a huff and throwing management under the bus for withholding information. This could be interpreted in a couple different ways.

  1. Schramm was simply doing some CYA to protect himself in these lawsuits underway
  2. The Management didn’t like Schramm and purposely made it difficult for him to provide input. This happens a lot with BODs. Emergency board meetings get held all the time when a company is in crisis. These are busy people with other jobs so they might miss a meeting. The board needs only a quorum to hold and meeting and vote, so it is possible to dodge BOD members who might disagree with management, and seem to be a pain in the ass.

Whatever the reason that Schramm left, it is unusual for a BOD exit to carry a fire bomb with it. Schramm will likely not get an invite to as many board seats as a result. Quitting in a public huff rarely achieves the desired results.

It may well be that Schramm took a run at getting Ted out as CEO. He knows that Ted is now a liability for getting better funding options for the company. Put simply, there are plenty of banks that would lend money to HMNY if wipeout Ted was no longer in the picture. My sources tell me that Schramm was well aware of this, and was the only one who could potentially sway the board.

Looks like Schramm lost that battle.

I look forward to reading Schramm’s book when it comes out. Certainly Moviepass must be an excellent case study for “burning the business plan”!!!!

It’s also important to note, Schramm did not sit on the Moviepass BOD, he was on HMNY board only. He may have thought Moviepass was a bad idea from the get go, we have no idea really.

What the Postmates Deal Means For Moviepass

Frankly I am mixed in my reaction to the Postmates deal.

On the plus side. It is a good brand that young people like a lot. I have 2 kids college age, they both use Postmates regularly, they like the service and recommend it. So there is a decent brand halo here, particularly for young audiences.

The deal means that HMNY and Moviepass are not exactly planning on dying anytime soon, and apparently they are able to convince other companies of this notion. Postmates would not bother doing a deal with Moviepass at all if they thought they were going to die in the immediate future.

I like that the company is looking to increase revenue from non subscription sources. At least they are executing on something here.

The new message of creating a “club” where subscribers receive different valuable offers is not a terrible idea. It is one I have suggested before here on this blog. Moviepass has a uniqueness to it that some easily forget. The location based debit card charge feature is something that can be lit up for things other than movies. Hopefully Moviepass can find partners who want to take advantage of that technology along with Moviepass’s audience size. Postmates could partner with local restaurants and other small businesses to do just that.

On the downside.

The odd thing in the messaging on this deal is Mitch has talked about ending the cocooning phase, and rallying around a “night out” concept for months now. Bit, Postmates is the ultimate hermit service. You can get about anything delivered right to your door. Mitch tried to acknowledge that in the PR with a hand wave to “we know our subscribers have at least one streaming service”. But that is a pretty lame data point. Who doesn’t have at least one streaming service these days?

Overall the news is positive. And near term death seems further and further away.

This does nothing to negate many other possible deals in the future, of anything it helps, which is also positive. Deals take time and build momentum if they prove out to be positive for both companies. Let’s hope for the best here.