HMNY Time of Death 5:27PM February 12th 2019

My final post on HMNY and apologies to those who invested in HMNY. The company is indeed being delisted from the NASDAQ today and moving to OTC. It is rare for a company to come back from this type of episode, and even more rare that stockholders won’t be totally cleaned out even if they do return.

Here’s the official news.

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

I learned a lot on this one. I will now file it away in my never ever ever again pile and move on.

It’s a shame, but these things happen when you take a big risk. I wish it would have turned out different. So many obvious mistakes, and so easily prevented. Farnsworth was always a scumbag, but Lowe also falls to a new level of scam artist.

OTC is not the very end, but it is in my opinion close enough to call it. I did not liquidate my position as it was so small it was no longer even a rounding error for my account. Also I said I would stick through this for at least 5 years, so I will hold that commitment.

I don’t expect any miracle. This is death for HMNY and likely Moviepass as well.

Moviepass is Still Alive

The “Ringer” offers a particularly interesting read into where Moviepass is today. The author offers a rare glimpse into what things look like at the company, and does a great job of pulling together a picture of an executive team that has gone from darlings to dolts over the past year.

The interview touches on everything from the ill fated photo of Lowe and Farnsworth in front of the AMC NY theater, to the 5 Million emergency loan last summer during the meltdown period.

It exposes the harsh reality of the half truths that were told by the company. And shines a light on the obvious issues that fraud and abuse were rampant with the way the service was constructed.

For investors it serves as a reminder of how totally dangerous it is to invest in early stage companies that don’t have a clear business model figured out. The chaos of Moviepass and the clear oversights of the management team are painful to read about. Everything from the lack of reliable fraud protection, to the stupid pricing scheme, to the cocky public attitude, wreaks of a Silicon Valley sitcom.

Obviously, there are a few ways you can interpret the piece. One, the company is just slowly dying and heading to the scrap heap of early innovators slaughtered by incumbents and stiffer competition.

Or two, the company has retrenched appropriately, and will rise from the ashes.

The interview makes it hard to determine if Lowe is a beaten man, or if he is simply frustrated from the last few months of failures and the public drubbing that came with it.

I have seen these things go both ways. I have witnessed miraculous turnarounds and total flame outs. My suspicion is that there is still enough belief and enough of a business left with Moviepass that Lowe and company will continue to push the nickel uphill with their noses. They still see light at the end of the tunnel and they believe they can build a meaningful business.

Luckily for them, they still have real subscription revenue to work with, albeit smaller and slower growing, with real revenue and managed costs they are likely close to sustainable.

That gives them some hope, and allows them some time to keep working through a plan that could work. If there was no hope, I think these guys would likely have thrown in the towel by now and sold the thing off for nothing and called it over. But I think they see hope and that’s why they are sticking to it.

I also know from experience, the new kinder and gentler attitude is probably only partially real. It’s more likely they still have long term dreams of totally disrupting the entire ecosystem. But they also now know that a Trojan Horse is a much more effective PR strategy than the “hey look at how cool we are!” strategy they had been employing.

It rarely makes sense to put a target on your head. When you walk around boasting how fantastic you are and how you are changing the industry, the industry will do all it can to make sure you don’t! So it’s not surprising that the PR strategy at Moviepass has changed to “get along to go along”.

But I seriously doubt that Lowe and company have left all their dreams behind. They are likely biting their tongue and biding their time and wondering if, just maybe, they can pull off something big still, but do it over the period of years not months.

If they lose hope, and the management begins to bailout, you will know they are done for.

I am sure it stings Lowe quite a bit that he now has to sit in some shitty office and talk to some smartass from the Ringer who is beating them down like a dead horse.

It is quite a fall from being the media darling hosted on CNBC and the national morning shows. Those guys now treat Lowe like a bad joke and a fraud.

Lowe wants redemption, and as a shareholder I sure hope he finds it!

Why is HMNY Going Up?

The answer is very clear. We don’t really know.

Here are the most likely possibilities.

  • The company is actually stabilizing, while it is likely never going to be the next Netflix, it may end up being an OK business.
  • The market Capitalization of the company had fallen to completely insane levels, around $12 million dollars. Moviepass the name, brand and URL are worth more than that, take into account the MPE total set of assets, it just made no sense for it to be that low. Somebody in the media world could take it over just for the pieces at that level.
  • It looks unlikely that the company will be delisted anytime soon. The NASDAQ is actually highly incented to see this mess turn around. Clearly HMNY management is pitching enough new ideas to NASDAQ to give them a bit more rope. Remember NASDAQ makes money on this stuff, so now they see the potential for 2 companies to be listed. I see them granting an extension and allowing MPE to spinoff as HMNY and Farnsworth have requested.
  • It is highly likely that Farnsworth will have nothing more than a board seat on the Moviepass new co listing. Lowe or the VP Itum will likely be named CEO.
  • Many investors hate Farnsworth and will not invest in any pass through companies. The spinoff solves both problems.
  • Itum’s message of Stabalize, Optimize and Grow is working. The press and customers are responding that is helping people get back to the main idea of Moviepass. It actually could work. Moviegoers want to go to the theaters, but they want a better and more convenient pricing and purchasing option.
  • A short squeeze is likely also in play. Traders who bet on delisting may be covering, and many were betting on BK. Both could still happen, but there is a better chance the company will survive.
  • Too early to say if the company will thrive, but I believe what you are seeing today is that more people think it is worth something north of $20 Million. I agree with that!

Finally, I want to apologize to greenteacup the prolific StockTwits character I highlighted in my last post. Apparently his account was banned from Stocktwits after my post was made public.

As bizarre as his account was, it was actually pretty entertaining at times. He reached out to me and told me that he is not short on HMNY, which I find hard to believe! Given he has been negative is almost all of his postings. But he says he was doing it for entertainment purposes. He also said that his dad is dying of brain cancer, which is vey sad, and I wish him and his father my sincere thought and prayers as I have suffered losses from cancer and it’s a terrible thing to go through.

So Stocktwits if you are actually reading this, and if you think Teacup is within you TOS, please let him back on!

Anyway- we really don’t know what today’s enthusiasm is all about, and as the new usual the company is saying very little.

Stocktwits – HMNY Board- the Worst of Social Media and Investing All in One Horrible Place

I admit it  – I am as addicted to social media as much as the next guy.  I have tried going totally cold turkey on Facebook, I made it for a while, but it has this strange gravitational pull to it.    I have weaned myself away from it, but for whatever reason, I seem to find myself back there.  It’s very odd to me because for the most part I really don’t like it.  I have little interest in most of the content, and I know my posts are totally silly and useless, and worst of all I feel worse for having gone there.

Social media is like a drinking binge, or eating that full pint of Ben and Jerry’s.  It feels sort of good at the time, but the results are almost always negative and lingering.   Luckily I don’t have an Instagram account, I don’t totally get Twitter, and I am too damn old for Snapchat.

By far the worst social media platform of any I have ever been a part of is StockTwits.   For those who don’t know about it, StockTwits is a social media platform designed for sharing ideas between investors, traders, and entrepreneurs. At least that is how it is described on Wikipedia.

StockTwits brings together all the worst of human emotions and behavior into a single stinking pile of social media dung.  Greed, deception, desperation, manipulation, all mixed in with relentless trolls looking to break the spirit of their adversaries.   It is truly a social media hell on earth.

I found this horrible place when I found my most horrible investment idea   and total scam company Helios & Matheson  – the terrible parent company of Moviepass, with the worst and most idiotic scammer CEO Ted Farnsworth.  A mistake I will never forget – both because of the 99.9999% wipeout, but more for whatever strange reason I decided to start writing about this company when I was intoxicated by the central idea of the company and believed the lies of the management Mitch Lowe – CEO of Moviepass, and Farnsworth  – CEO of HMNY told with regularity through an eager press.

StockTwits brings together greedy and stupid day traders, paid manipulators, and sad misguided investors.   I suppose I was the latter of these three.   When you are invested in a small company that is in trouble, and they are not communicating with their investors, you get desperate.  So you seek information wherever you can find it.  Many desperate people head to StockTwits to see if they can find any useful information to help them figure out what is going on.   Let me save you some time and trouble – there is absolutely ZERO useful information available on StockTwits.

Using StockTwits for investment advice or information is like using a hairdresser to get medical advice.  She may offer it up, but it’s probably dangerous!

For those not on the platform, let me give you a few clips to give you an idea of the intelligent discourse going on during today’s bloodbath of the near-final death experience of HMNY today.

 

This is a fun one – I have to give OV3R_9000 some credit, these GIFs took some work!

And this one also worth honorable mention

 

By far the most prolific poster I have ever seen on StockTwits is some guy who goes by the alias GreeTeacup.   This dude is seriously obsessed with HMNY, he posts at least 50 times a day on the platform, he is short on the stock.  The guy is totally demented, but his posts are sometimes actually pretty hysterical.  He is a master at creating and sharing animated GIF’s.  They are often GIFs of Farnsworth in compromising photos.   Here are a few of his good ones!

 

Teacup is a busy guy.   I don’t know if he is a bot – a paid short dumper, or just an insanely angry bagholder.  Whatever the case – he is a one of kind.

Maybe the most interesting person of all on StockTwits is a guy who goes by the handle CharlieTheHomeless.  This guy has made the deliberate choice to live a homeless lifestyle while investing in a bunch of penny stocks in an attempt to strike it rich, retire early, in a paid for house and smoke pot all day.  At least that is what he says he wants to do.   I chatted with  Charlie a bit in a couple of direct messages and I was impressed with how dedicated he was to the lifestyle.  I honestly do believe he is legit and homeless.  Interestingly, he has a job, and he has been through a lot in life, he rejects the traditional path and wants to make it on his own terms.  He told me he had a vision about HMNY – although he may have been high at the time.  He found the HMNY board and went all in.   I really hope HMNY turns around for Charlie and he gets to live his American dream out.

NOW – Bringing this back to me and you the reader,  maybe I can help some of you.  I highly recommend avoiding the cesspool of StockTwits.   I am trying to quit it – like I am trying to quit Facebook.   I am pretty sure that once HMNY and Moviepass are dead dead, I will be able to kick the bad habit of checking it out just one more time…

Today I made the bad mistake of checking in and ran into some dude who calls himself Hans_jergoff –  He seems like a total jerkoff, so the name appears to be fitting.   He/She is a fairly prolific short on HMNY and loves rubbing the “I told you so” off on people’s faces.   He trolled me today and I was foolish enough to engage.   My father always told me, don’t wrestle with a pig, you will both end up covered in shit, but only the pig will have fun.   That was pretty much the case with jergoff today.  It was messy.

There was a time when I said I would miss the HMNY StockTwits board.   But now I know I was just being a stupid jerghoff when I said that.

Of course, there is a .000000001% chance that Moviepass survives, and if it does, and a miracle happens, I hope jergoff is still around to take a shot from me!

 

 

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.