Moviepass is definitely becoming a candidate for a friendly or hostile takeover. There are many rumors now flying around that different VC companies are taking a fresh look at the company.
Looking at the latest rounds of press and the stock price now at .07 – it would be logical to assume that death of the company and the brand is a forgone conclusion.
An alternative idea is now being considered by VCs that the brand and at least part of the business model for Moviepass has considerately more value than what is represented by the stock at today’s market capitalization. Currently the Market Capitalizing sits somewhere around $2M dollars. That number is difficult to know each day as the company floods the market with more and more shares everyday. Using the 5B share ATM it has available to it.
Obviously there’s some realistic chance that MP will go BK, but I continue to believe that is unlikely, and my updated models show that changes made have seriously reduced cash burn- agreeing with the company’s guidance that they are trending toward financial stabilization.
I am not the ONLY person who sees some value here. We live in an age where publicity, even bad publicity is valuable. Think Paris Hilton or Kim Kardashian sex tape here. When these tapes came out many years ago people thought it was unfortunate and embarrassing for the young ladies involved. Nobody dreamed that the Kardashian’s mishap would have resulted in a billion dollar worldwide brand with clothing lines, makeup lines and so much more. That’s right there was a point where people actually felt “sorry” for the Kardashian’s invasion of privacy! The same holds true with Paris Hilton, who leveraged her naughty deeds into nightclubs, restaurants and all kinds of other lucrative ventures based on her universal name recognition.
As I have mentioned in prior posts, I was part of the original marketing team before Microsoft launched the “Bing” brand to try and compete with Google. At that time we were asked by the CEO to come with various estimates as to what it would cost to create a consumer brand from scratch that could achieve 60-70% unaided brand awareness. This is simply a measure of if consumers have heard of you at all, not of they like you or intend to use your service. That was almost 10 years ago now, and at that time the LOWEST estimate we had for that endeavor was it would take $600 million dollars of Marketing Spend to hit that level of awareness.
Moviepass love it or hate it, is now very well known. It is a brand and it is a thing consumers understand and have real interest in. Many people loved MP before financial trouble hit. The nasty trouble and changes MP is going through now, can be amended, fixed and restored. Like the sex tapes of Hilton and Kardashian – the name is known and the sins of the past could easily be forgiven.
I estimate the publicity of Moviepass to easily be worth $100’s of millions. And to think a crafty VC firm could potentially take a significant position of HMNY for less than $1M today seems like a good value bet.
The obvious risk here is that Farnsworth has Billions of shares at his disposal, and he could dilute any would be acquirer by simply dumping billions more shares on them.
But, a hostile takeover may also be possible. In that case if a firm took a large enough position quickly enough, they could storm the company and get at least a temporary injunction to halt additional dilution, and potentially nab the entire company for a very attractive price.
I expect some action on the acquisition front very soon here. It will be a fascinating next chapter!