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.