New Hope? New Monthly Plans? A New Moviepass Model!

Updating this quickly after the new ATM news. I can only assume the worst here. I assume the following now.

  • The company is desperately broke and sales of the yearly plans did not work well
  • Utilization likely still too high

Why any institutions would give these guys any money at all is a puzzling thought.

Assume the business model and my financial model are off. Things look bad.

–—

I have created a very quick new back of the envelope model for Moviepass.

This is a pretty wild guess and it may be way too optimistic.

A few key points on this model – and why it could be way off:

  • The company has not shared an updated official subscriber number in months
  • Former Utilization rates claimed by management are not reliable.  The new limited plans have not been in the market long enough to be reliable predictors of consumer usage.
  • Churn rates from old plans and uptake on new plans are not well known.
  • The sales mix of the new plans is not known.

Why I believe the model could be near reality

  • Against all odds – the company seems to be surviving without new funding
  • The company has shown willingness to be brutal to consumers in order to survive – massively limiting inventory – making the product at times nearly impossible to use.   Thus it is likely sub numbers are way down, and usage is also way down.
  • I believe Moviepass will continue to limit the use of their lower end product.
  • I believe the uptake on higher end Moviepass products will be limited due to competition from AMC and limited consumer demand above $20 a month

I do not recommend buying the stock on this model.   Any feedback is welcome on Stocktwits.  Consider this a conversation starter for now.

Will Moviepass HMNY Be Delisted This Week? Probably Not – But the Clock is Definitely Ticking

HMNY the 92% owner of Moviepass is at risk of being delisted off of the NASDAQ this week for failing to trade above $1 for at least 30 consecutive days. It’s been a while since HMNY has seen their stock price above the measly 1 buck level and the bosses at the NASDAQ I am sure have likely had enough of Ted Farnsworth and his antics.

Once shareholders rejected Farnsworth plan for a second reverse split of HMNY’s shares within just a few months after the last 1 for 250 split, the die was cast for a delisting. Many believe the news of the delisting will come this week, while others are betting that the company will find a last ditch effort to save itself from this next humiliation.

My guess is that HMNY will be able to stave off delisting this week, but that if they don’t deliver a meaningful bit of news within the next 90 days they will likely head to the OTC trash bin sometime shortly there after.

My reasoning for this is the following. First, HMNY does have most of the ongoing listing requirements in order. They have enough publicly held shares, revenue, total shareholders to meet those requirements. I believe they have enough stockholders equity as well, although that one is dynamic.

The obvious requirement they are lacking is the bid price staying down in the one to two penny range. The NASDAQ hates penny stocks as they are well aware that this leaves shareholders vulnerable to the scumbags who manipulate shares with pump and dump schemes. These are ugly circumstances the NASDAQ would prefer to avoid.

That said, the NASDAQ is also well known for continuing to extend the life of certain companies if they believe it may serve their investors or serve the interests of the NASDAQ itself. Moviepass and HMNY I believe will get a stay of execution based on this motivation.

Moviepass and HMNY took such a wild ride from media darling to unloved villain in such a short period of time, the NASDAQ may well be willing to cut the company some slack to see if they can get their act together.

The company could make a legitimate argument that it has retooled itself to deliver a sustainable business plan. And if Moviepass can show some positive momentum with its new plans introduced this month, and show that it is no longer setting cash on fire like it has in the past, the lords of the NASDAQ may grant the company a 180 day extension to allow the then to come into compliance.

What is the likelihood that HMNY will come into compliance within that time period? My guess is far less than 10%. With 1.6 Billion+ Shares outstanding, it would take a Christmas Miracle to get HMNY above $1. The only way I could see that happening is if somehow HMNY started to generate enough cash to start doing a meaningful share buyback program to seriously reduce the number of outstanding shares. Or if in an extremely unlikely event HMNY could find someone to loan them a big chunk of money based on their improving fundamentals that too could cause the stock to jump past the $1 range for a extended period of time. Or a combination of those events could happen. Although that is also highly unlikely.

Another option the company is still trying to pursue is making another run at doing the reverse split. Any R/S would have to meet stockholders approval of course, and there’s no reason to believe a new R/S would receive a yes vote without a significantly improved plan, execution of that plan and a CEO change.

There is some possibility that the company could be bought out at some premium from the low price it is trading at today. The event would make the delisting irrelevant. The company leadership has indicated in the past that there has been buyout interest, however everything this company has said has been proven to be outright lies or half truths to this point. So there is no good reason to believe a solid buyout is in the offing.

The most likely scenario is that the company will get an extension from the NASDAQ and they will try to continue to turn the company around. Unfortunately, it is also likely they will eventually run out of time and end up getting delisted and moved to the OTC market. From there a lot of things could happen, ranging from going private, to later being bought out, or to eventually just go bankrupt. Only time will tell.

I am of course hoping for a Christmas Miracle. And yes I believe in Santa!

Moviepass Maybe Finding Some Footing

It’s been a while since we have talked Moviepass here. Basically, the company has been on a silent death spiral for the past few weeks and there has not been much to say other than to hope and pray that management could get their act together, or even better, get rid of Fartsworth altogether.

Amazingly folks across the internet and social webs are reporting surprisingly good ticket availability. I have noticed a small but significant improvement here in my small hometown as well. I was even able to score 2 tickets to Bohemian Rhapsody, a movie that I thought sure I was going to have to pay the full ticket price for expecting I would never be able to get a ticket via the Moviepass scam. I had to run to the theater many hours before the movie time to make that work, and there were other poor souls from Moviepass who had already beat me to the punch, but l was still lucky enough to score the tickets.

As I mentioned in a previous post, Moviepass has gone low. The service is settling in as a bargain basement type service that offers a decent value with some extra headaches, it is not for everyone, but it can and should work for many. As I have explained before, if Moviepass can extend a theatrical release of a film and boost box office total receipts it can be good for both theaters and for studios. Theaters gain in two ways. 1- more people fill seats instead of waiting to see the movie in-home. 2- of the films are viewed later in the theatrical release the theaters keep more of that revenue for themselves. The consumers have to accept that they may have to wait to see the movie later in the cycle. But for many, not all, that will be a trade-off they will be willing to make.

Studios benefit as not only does the improved theatrical release help the bottom line immediately, it also helps to drive downstream revenue for streaming and other in-home release revenue streams. Downstream revenues are determined by a factor of how well a film does in the theatrical release. Meaning a strong theatrical release improves all the rest of the revenue a film will make 10 years or so of its life. It’s important to studios. And it is why the MoviePass Ventures could someday have a leg up on the competition.

Another piece of positive news was the promotion of Khalid Itum to Executive Vice President of the company. He appears to be a solid choice for the role. He has the right background, but even better, he seems to have a clue when it comes to what the company needs to focus on to achieve and capitalize on the success it once enjoyed. As stated in the release. While his quote was extra long he hit exactly the right points and the right tone. It’s the first thing I have seen from this management team that appears to be truly customer centric!

“I’m eager to continue building MoviePass and am proud of how far we’ve come. The road hasn’t been easy — and the hyper growth has been challenging. However, we’ve taken a hard look over the past few weeks and months at what needs to happen in order to not just preserve what we’ve built, but to use it as a foundation upon which to build. Because of this, I know we’ll emerge a better partner to the theaters (big and small), major studios and independent distributors with whom we have the privilege of working to collectively best serve the interests of the American consumer,” said Khalid Itum, Executive Vice President of MoviePass. “You may notice we’ve been out of the news for some time, and that’s been by design. At MoviePass, we’ve recently prioritized building toward a vision that aligns our success with greater consumption of entertainment. You’ll soon be able to judge for yourselves, and I believe that the best marketing we can do, today and always, is to enhance our product and treat our subscriber as a member of something special: because that’s what MoviePass is to a great number of Americans already. It’s on us to regain their trust. I believe the future is bright for our company, and I couldn’t do it without my team which has been giving its 200% dedication and effort to transform the offering and platform into its full potential. I look forward to announcing some powerful additions to our management team to join with us in charging forward.”

This sounds like a guy who actually “gets it”.

There is a lot packed into that quote. Let’s go over it.

  • He knows that they grew too fast and screwed up the experience
  • He believes focusing on the customer experience is the best marketing- that’s really really important. Just doing stupid deals and promotions doesn’t work. They need the product to work. And be something people value. He seems to get that.
  • He tips his hand that things are about to change and new things are coming. He sets expectations to see some decent news soon!
  • He seems to be dedicated to helping his team succeed and to bringing on new talent who can help him with improving the service.
  • For the first time in a loooong time it appears we may have a solid guy leading the day to day operations. Mitch Lowe I think is a good concept guy, and big thinker, but I think he is weak on details and hardcore operations. Fartsworth is essentially worthless. He was supposed to be a money and deal guy, but he has proven to be neither. So having a guy in place who may actually be able to run a business could be a very big boost to helping Moviepass survive.

On a final note. It occurred to me that the Costco promotion for Moviepass happened about this time last year. We don’t know how many people found Moviepass via Costco, but I think it was a big chunk of their early hyper-growth. Costco customers will take a good deal with extreme confidence because they know that Costco backs their products 100%. I know I would have never bought Moviepass had the yearly deal not been offered by Costco. This was probably a deal the Moviepass ended up regretting a great deal. Costco customers – particularly their online customers are deal seekers, and they love getting something of a crazy good deal.

The problem with these customers I believe is that they used Moviepass more than they ever thought they would. Just think about Costco’s members. They have a TON of people who are retired who have little else to do than wander around the store snacking on samples looking for bargains. These are the exact people who have too much time on their hands and will see lots of free movies on an unlimited plan. Yes- I am one of these people. Although I was not a huge abuser of Moviepass because I am actually pretty busy. I did intend on using the service and getting my money’s worth.

Making matters worse for Moviepass, the deal they struck with Costco forced them to keep Costco customers on the unlimited plan. Moviepass was able to move all of their other customers over to the limited plans months ago. Because they were out of money and had all these unlimited Costco users eating up cash, they hatched all kinds of ways to restrict usage. Those measures basically ruined the service for everyone. Although in the past several weeks users on the new restricted month to month plans did start seeing more showtime availability, much better than the legacy Costco customers on unlimited.

The good news for Moviepass is the Costco customers are now starting to expire their first year. These customers will be rolled into the limited plans, and Moviepass will start seeing revenue from the customers who remain. Who knows how many are still around? That’s anybody’s guess at this point.

I do think that this may be the beginning of the end of the terrible Moviepass experience from the last couple of months.

Let’s hope the new guy can live up to his promises. I am calling him DJ Khalid!

Lord knows Ted never could!

Stop Your Delusion – You Can’t Beat The Market and You are Wasting Your Precious Time Trying

In my last post, I wrote about the things that I learned and relearned by investing in MoviePass and HMNY.  Believe it or not, HMNY is not the worst investment I have ever made, at least not yet.  I have actually owned stock in two other companies that lost 100% of their value.  Washington Mutual was one, and XO communications was the other company, both went Bankrupt because of bad management and risky bets that did not pay off.  Yes, I should have learned my lesson fully with those two terrible stocks, and in fact, I had learned my lesson but unfortunately, I fell back into a bad habit of using the wrong parts of my brain (which are always functioning whether you like it or not) to make my investment decisions.  Luckily, I had previously experienced enough pain with those prior decisions to limit my portfolio exposure to HMNY.  I only wish I would have not wasted any time or money investing in HMNY at all.   The ONLY good thing that has come from investing in HMNY has been the reaffirmation that it is totally foolish and delusion to try and beat the market.  Again, this is something I inherently already know, both from hours and hours of studying investing and from my own experience over 35 years plus of investing.

There is a saying that I have seen around that goes something like this.  If you could beat the very smartest students on a test 99.5% of the time, by doing essentially no studying and putting in almost zero effort or preparation but simply follow a simple prescribed method of filling out a test, VS. studying for hours and hours, fretting over every decision on what you study and if you were considering the right factors; only to be almost certain you would not beat the average benchmark, what would you do?   The answer is obvious, you would take the path of least resistance, you apply the obvious known prescribed method to score in the 99.5% percentile of returns.   In investing, it is so obvious that our miswired silly human brains almost refuse to acknowledge it.

WAMU, as it was called, was a very big company, with almost 50,000 employees and around $40 Billion dollars of assets under management.   Because I lived in Washington, I could see first hand how big and successful WAMU appeared to be, they had branches all across the state, and eventually grew all over the West Coast.   They were a beacon of strength and stability, or so people thought.   When 2008 rolled around, it became evident that WAMU had taken on way too much subprime business, their assets were seized by banking authorities, a bunch of their assets were sold off in a fire sale, and the Feds sold the rest of the business to JP Morgan Chase for a huge discount.  Stockholders of WM were totally wiped out via a Chapter 11 bankruptcy filing.

For the sake of brevity, I won’t go into detail on what happened with XO Communications.   Basically, that was a riskier tech/communications stock that was similar to HMNY in that it had very dishonest management, it cleaned out stockholders, filed Chapter 11, got reorganized giving the dishonest and terrible management fat pay packages after totally ruining the company.  It was a sham, and it was many years ago now.   But you remember the really bad ones like HMNY, XOXO, and WM.   They hurt, and they should hurt.  As Warren Buffet says, the first rule is “Never Lose Money”.   And as easy as that sounds, when you are picking individual stocks, it is surprisingly easy to lose money, permanently and forever.

The good news is, that there is really no good reason at all to own individual stocks.   In truth, it is a terrible mistake for almost all investors to even try and pick stocks.   It is as the title of my post suggests, delusional to believe that you as an individual investor will beat the market averages.   But you definitely should not feel bad about that. Professionals also can’t beat the market.  It has been proven over and over again, for decades now, that fewer than 1% of professional traders beat the market.  And when they do beat the market, it is usually by a very small amount 1-2%.   There is literally reams and reams of studies and data that prove that Mutual Funds, Hedge Funds, Private Equity Funds and any other type of fund you wish to call into question simply cannot beat the market over a long period of time.  One of my favorite articles on this topic is from Julie Segal from the Institutional Investor, “Beating the Market Has Become Nearly Impossible”  It is worth a read if you insist on insisting that you can deliver better returns than the market.    In particular, I like that the article discusses some of the reasons that institutions keep trying to beat the market.   The article also has some links to academic studies that prove with data that professionals simply can’t beat the market.   It is a fact, people who are very smart, who have years of training and experience in the market, who spend their entire days working on finding unique opportunities to deliver market-beating returns – simply can’t beat the overall indexes.

What is the reason for this?  Well nobody knows for sure why.  But the simple answer is that markets tend to behave irrationally and humans tend to make bad decisions when faced with irrational markets.   It is as simple as humans tend to buy high and sell low.  But it is really more complicated than that.  There are all kinds of theories about the market and how it behaves, how information is disseminated, received and acted upon.  You can read book after to book on this subject.   I can save you the trouble here, all the factual based books come to the same conclusion.   You can’t beat the market, and it makes no difference how much you have studied them, how much experience you have, how many people you have working for you, or how smart you are.

Why do people with wealth keep trying to beat the market even when they know it is extremely unlikely?  That is an interesting question.  I have heard and read a lot of different reasons for this, and I will explore a few of them here.

One reason I often hear is that people with wealth tend to view themselves as somehow special.  After all, wealth has bought them privilege and luxury in almost every facet of their lives.   From private schools to luxury vacations, luxury cars, to the best doctors, to the best country clubs, wealthy people live a life of constant privilege.   From this experience, they have grown accustomed to “paying up” for the very best.  So when it comes to investing, most wealthy people simply believe that they need to “pay up” to get the best financial advisors and management.  For the wealthy, it is totally incongruent with the rest of their lifestyle to think that they could do something pedestrian like simply buying a low-cost Vanguard ETF to achieve performance that is on par or better than what they could receive from their high priced or “sophisticated” investment or wealth advisor.   It doesn’t matter if Warren Buffett himself advises personal investors to stick to low-cost by7 ETF funds.  The rich think that they can and should do better, even if all the evidence points in the other direction, they want to pay for the “best”.

Another common reason I hear about is that people with money like the “club-like” nature of investing with a wealth manager.  For high net individuals, many wealth management firms offer all kinds of special activities for customers who invest with their firms.   I have been to a few of these things over the years while being pitched to invest with various firms.   They offer things like nice dinner events, event tickets like sports or concerts, exclusive things like meeting local celebrities and such.   Some of the things are actually really cool and fun.  To me, it always felt like a very expensive way to buy friends.  Most firms charge around 1% of your total portfolio yearly.   That doesn’t sound too bad until you look at how much that will cost you over several years – most people agree that paying that kind of money to join a “club”  and to buy some friends is not worth it.   Trying to be open-minded about this, there may be some good networking opportunities in things like this, I never really found that to be the case, but I was not really in a position where networking with high net-worth people was super important to me or to my lifestyle.

A third reason that people choose to pay expensive financial advisors who don’t beat the market, is they both lack the confidence in themselves to manage their own money, and they prefer to be separated from that task.  Both to protect themselves from their own mistakes and to insulate themselves from any bad outcome that may happen, such as losing money or badly trailing the market.  It is easier to tell the significant other that the “guy or gal” we hired to manage our money sucks!  Than it is to tell them – hey I suck!  These are not necessarily bad reasons in my opinion.   However, there are good and bad ways, or better put, excessively expensive and fair priced ways to get this job done.  It makes zero sense to pay expensive fees to a salesperson, relationship manager, investment advisor, or whatever other bullshit titles these people put on their business cards.

If you really want or need help, pay fee-based certified financial planner for some time to help you understand how to efficiently allocate your portfolio.    If you want a firm that will do basically all the work of setting up a portfolio, rebalancing it, do loss harvesting in a tax-advantaged way, take a look at betterment, they charge only .25% and their results are consistently much better than any private client banking.   They have some good historical comparison data on their site that shows how much better they do.     I know a lot of really smart people who have done really well in their respective fields who simply have zero interest in managing their own money.  They just don’t want to deal with it for whatever reason.   I think that is fine, but just like buying a house or a car, or managing your healthcare, or any other major life decision you make.  You should at least get educated enough so you don’t get totally screwed over.   You wouldn’t buy a house without investigating the neighborhood, looking at comparable homes, getting an inspection and all the other things homebuyers do.   You certainly wouldn’t just hire a realtor and say, buy me whatever you think is best, and I will just live with it!    So don’t do that with your money either.  If you do, you are pretty much guaranteed a subpar return, and worst-case scenario, you could get totally burned by another Bernie Madoff like scandal.

Finally, there is the “I like the game” rationale for why people try to beat the market.  I fall into this category some, so does my father.  So I get this idea, it is part gambling, part skill,  part entertainment.  It is hard to blame any of us for wanting to play the game.   You only need to watch CNBC for a few hours to see what a bedazzling casino-like world investing can be.   Having worked in media for many years, the tricks CNBC uses to keep investors glued to the set and salivating for the next nibble are as old as the knowledge of not being able to beat the market.   CNBC is an exercise in eye candy, sensationalization, and the constant promise of continual changes that seem oh so important.   It is like crack to the personal investor/gambler.    I remember when CNBC for started out in 1989, yep I am that old and have been watching it from the start.   It was a totally different animal back then.  There was very little in terms of slick graphics, wild entertainment commentators like Jim Cramer had not really gotten started yet.   For most of the day they didn’t even run a ticker across the bottom of the screen.  (Take a look at the Inaugural broadcast, we have come a long way from 1989!)

Compare those early days of CNBC to what you see now.  It is a fined tuned machine for grabbing and holding your attention.  Not only do we have a constantly changing ticker running all day, we now have two of them stacked up at the bottom of the screen.  In addition, there is a constant barrage of fancy graphics zooming in and out of the screen, a charging bull! – A scary bear!  Instead of one or two anchors, most CNBC shows have 4-5 people at a roundtable, and if that is not enough, they are constantly bringing in guests from Wall St with their latest calls!   In the lower right-hand corner of the screen, you have the constant update of the Dow, the S&P 500 and the NASDAQ.  And if all that were not enough to put you into hyperstimulation mode, that graphic constantly flips over showing the 10YR bond, the dollar and some other crazy thing I can’t even remember.    My dear wife says it the best, turn that damn thing off it is stressing me out!   Personal investors who pick stocks live in this bizarre state of FOMO, (Fear of Missing Out).  Will I miss a critical piece of news on a stock I hold, will I miss out on an up and coming IPO, or a new opportunity?  Will the market make a turn right when I was not looking!!?    The game of investing is stressful and exhausting.  Along with being totally delusional and pointless.   One good piece of advice I have heard on dealing with the need to “play the game”.  Take a very small part of your portfolio to gamble with, maybe 1-3% of your total assets.  Set that aside in a different account for discipline.  Trade that account any way you see fit.  Compare your results against the results of the rest of your portfolio that is in low fee market-based ETF’s.  Do that for at least 10 years.  If you significantly beat the market-based approach, go apply for a job on Wall Street.   There is a 99.5% chance you won’t be changing your day job

Coming full circle, every single serious scholarly and professional data-driven study has proven that it is almost impossible to beat the market averages.  Hedge funds almost never beat the averages.  Highly paid wealth management firms do not beat the averages.  Day traders almost never beat the averages.   The industry and the media make a lot of money trying to convince you that you can beat the averages, but they all know that it is not true.   It is a lie you are told and marketed to so that they can make money.  CNBC, Fox Business News, Motley Fool, Seeking Alpha, the myriad of investment newsletters, they are all trying to make a buck off the industry.

Worst of all, trying to beat the market takes an incredible amount of your most precious asset!  Your time!  Further,  it can be extremely stressful so it is bad for your mental and physical health trying to beat the house.  So my very strong advice.  Stop being delusional.   Stop buying individual stocks.  Don’t lose money!  Make investing boring again.  Buy a basket of low-cost ETF’s from Vanguard, rebalance yearly to the exposure you desire, and never look back.  You will do very well, and you will perform better than 99.5% of your peers!  OH – and STOP with the delusion!

 

 

 

 

 

 

What I Personally Learned Investing – or umm Gambling – on HMNY/Moviepass

Wow did Moviepass and HMNY really humble me as an investor, or should I say gambler, on stocks.   I learned a lot and man oh man did the experience humble me and make me a bigger skeptic than ever before on Wall St. and buying individual stocks.   I have always accepted that buying individual stocks is risky, and have always tried to advise people who read this blog to not invest more than 1% or possibly 2% of your portfolio in ANY single stock.  I sure stand by that advice as we head toward the end of the year.  With Moviepass in a literal death spiral that looks very unlikely to correct, I am very grateful this Thanksgiving that I stuck to that rule.

In this post, I want to share some of the biggest lessons I learned and really relearned after investing in HMNY.  I think it is important to write these things down so I am less likely to repeat the same mistakes, and I figured I might as well share them with others in hopes that maybe they can learn from my mistakes and save them from making the same.

First big lesson – I did not do enough due diligence on the management of this company.   I was aware that Ted Farnsworth had a less than stellar record, but I did not truly understand what a total crook and fraud that guy was and still is today.  It is just about impossible to do well with a stock if the leadership is dishonest, self-serving, and has a bad past.   I overlooked Farnsworth because I really believed in Mitch Lowe, that also turned out to be a mistake.   While I still believe that Mitch Lowe has some good qualities, I believe I heavily misjudged him as well.  While Mitch did play a role in Netflix and he also did a decent job at Red Box, it appears that he is not investible on his own right.  He really spent a relatively small amount of time at both of those companies, and it now seems more likely than not he had little to do with their success.  Mitch and Ted together was a toxic management combination, bringing together greed, entitlement, carelessness, hubris and all kinds of bad things for shareholders.   I should have listened more closely to what others were saying about Ted, the signals were there, it was my mistake not to listen to them.  I truly hope Ted lands in jail someday.   His deceit caused many individual investors to lose a lot of money, some have said that people potentially committed suicide over their losses related to this company.   I sincerely hope that is not the case.   I think Buffett and Charlie say something like that greatly prefer a talented management team, but they would take honesty over talent any day.  Because if you are both talented and dishonest, you are very dangerous.  It may be giving too much credit to Ted to say he has any talent at all, but he most certainly is dishonest.  It was a big mistake to trust him with a single penny of my money.

My second big learning lesson.  I was arrogant and put on blinders.   This one really gets me as I have had enough training and experience to know better and to be more thoughtful and fully consider other people’s ideas and opinions.  In this case, it was even worse because there were good people who knew more than me about the potential pitfalls of this stock, that I should have listened to more carefully and with much more respect.   Mark Gomes was one such person, but there were others who also warned me that this was a risky bet and that dilution and potential lack of funding were serious potential roadblocks with the company.  Obviously, they were right, and had I listened and really sought to understand their arguments and weighted their experience and opinions equal or better than my own, I would not have bought a single share of HMNY.   I have always loved Warren Buffet’s simple baseball analogy for picking stocks.   There was enough wrong with HMNY that I was a fool to swing at that pitch.  The bad and dishonest management history and the fact that others with solid stock picking experience were waving red flags over the company’s dilution and ATM plans.   Those were more than enough to toss this one on the heap of “I am not sure, maybe later maybe never pile”.  Unfortunately, my own arrogance and bullheaded nature enticed me into believing what I want to believe about Moviepass, I was stupid enough to also believe what dishonest management was saying about their business.   I used management’s lies to reinforce my own arrogant tunnel vision on the positive prospects for the company.  This made for a fool and his money – being easily parted.  Shame on me for not fully listening and considering more viewpoints.  That was a rookie mistake, and I know better.  Damn it!

Third learning lesson.  Wow is this an obvious one, if it is too good to be true – it is!  That was definitely the case with Moviepass, both the consumer deal and the business story really was too good to be true.  I can almost give myself a pass on this one because Mitch Lowe, in particular, was so convincing with his pitch, he had his song and dance on how they had years of data that proved that people would “settle down” and on average utilize Moviepass less than one time a month on average.  That was total bullshit of course, and only now after making the product totally impossible to use have they been able to get utilization rates anywhere near where they had promised they would be with the unlimited once daily plan.   But I can’t give myself a pass on this one, because

Fourth learning lesson.  This is really an aside, but may be useful for some.  Generally people on stock boards like stock twits, yahoo etc. are really horrible people.  Not all, but most.  I have bumped into a few good people on these boards, but for the most part, these boards are full of angry, strange, rude, petulant trolls who seem to be miserable most of the time.   I regret almost all the time I have spent on these boards, and regret engaging in similar conduct from time to time on them.   These places bring out the worst in people.  They are like the Vegas strip full of losers, gamblers, and hustlers – only they are worse because it is all virtual and almost entirely anonymous which means that it is rare to run into anyone with even a modicum of civility.   I am pretty sure that an eternity in Stocktwits is what hell would be like, just add the fire.  I highly advise people to totally stay away from these boards, and if you do go to them, visit them sparingly.   The advice is generally bad, not trustworthy, and the environment only leads to bringing out the worst of human behavior and it is hard for it not to rub off on you.

My fifth and most important lesson – or reaffirmation in this case.  It is almost impossible to beat the market, and it makes no sense to try.  I know this and have known it for many years.  There is so much overwhelming evidence of this fact that it smacks of total stupidity to try and pick stocks that will help you do better than the market.   I will write another post that goes into this in more depth soon.   I will also talk about why I think many people just keep on trying, even when they know that can’t beat the market.  It’s something like a gambling addiction, but worse because it is so delusional.   But it is important to reflect here that this was another insane attempt to beat the market that backfired for a lot of people.  As a group, we know it is stupid to try, and if you don’t know, I will spend a good amount of time trying to convince you that you are not the 1% or less of people who can beat the market.  If you are reading this, I can guarantee you that you are not the type of person who will likely ever beat the market, so you should just put down the mouse and turn off your trading screen before you hurt yourself, or your financial future.

In the end – I promised myself and readers I would hold on to this stock for 5 years.  I have about 4 years left to hold this heavy bag, and there is a cold day in hell scenario where this stock does return some value, it will never ever get back to its all-time high.  But there are some possible scenarios where this POS gets a bit back.  They are highly unlikely of course, and I absolutely do not recommend this stock to even my worst enemy on Stocktwits.  – Well maybe to them, but nobody else 🙂