There are bits and pieces in terms of discussion about HMNY but not many thorough posts about why to buy/sell, so I looked into HMNY and here are my takeaways. Please respond if you disagree with what I wrote, I must be missing something.
Note: I have no stake for or against HMNY, I was confused about its trajectory and decided to look into it.
Key takeaways
-
Current model unsustainable (obviously), do not have money to fund it and will probably lead to dilution
-
Data will not save Moviepass due to high potential of being undercut by AMC Stubs data collection (that already has 10 million households)
-
Easy for chains to copy model, major players already have infrastructure (AMC Stubs, Regal Crown Club)
CNBC interview with CEO (4 minutes on an awful website): http://ift.tt/2ggeI8f The above interview (I do not like the interviewers, they were annoying) is telling about how bad of a state Moviepass is in.
1. Current trajectory
Obviously they are burning money like mad, and will need a lot more in the future to sustain itself. HMNY reportedly only had 1.4 million cash at hand as of June and Moviepass only had 3.7 million funding OVERALL (crunchable) before getting acquired.
To be honest, it is very unclear for me about how they can sustain it other than hype.
Three options:
-
Increase subscription cost (lose potential subscribers)
-
Private capital (I do not know why someone would invest the tens of millions required in a company with little potential to survive [see other points], but it has happened before I guess)
-
Another offering, expect shares at discount and for stock to lower as a reaction (DILUTION!)
This is just one point and a rather small one, the next two points are what really made me confused about how there are still people who think it will go to the moon again.
2. Data collection competition
The CEO even acknowledged they will make their money long term through data mining in his CNBC interview one week ago (I did not really like the interviewers but he said interesting things):
His argument is that movie production companies have immense difficulty finding their target audience and that by tracking their viewing habits Moviepass can make bank by providing that information and therefore save money for the movie companies themselves (see the CNBC video at top of post).
He says:
"A huge amount of it is about the data because you know this whole system is broken about the movie theater business, imagine: Warner Brothers does not know who saw the previous Batman"
This is VERY MISLEADING
Obviously this is the most important data point, and just three minutes of googling led to this page on AMC theaters website: http://ift.tt/2xUDnSs
Here, let me paste the important part, said by Adam Aron (CEO/President):
“Ten million member households for AMC Stubs is an important achievement, especially given the valuable consumer database we have built with powerful information about moviegoers. This is true, especially given the short amount of time it took us to get there"
THEY HAVE A MOVIE CONSUMER DATABASE WITH TEN MILLION HOUSEHOLDS THEY GOT FOR FREE
That is right. Moviepass can hundreds to get the data of a single consumer for one year, or AMC has already been getting that information for some time and with much more users.
So can they collect data? Sure. But for production studios it would make more sense to get the data from the movie theater companies who they already have a prior relationship with, have more information and the studios are probably weary of working with a disrupting force in their industry.
3. Ease of replication
When asked about why AMC is whiny, he responds with this:
"They [AMC] are going to launch their own subscription program later this year"
First off, I can't find any sources other than literally the CEO of what would be AMC's potential competition about this future unveiling, so it is weird he said that.
HOWEVER, it is in fact very easy for them (and Regal and the others) to simply add on to their current upgraded users (AMC Stubs/Regal Crown Club) the ability to watch a free movie, although I believe they may already offer it after a certain amount of points in those clubs.
The top 4 movie chains represent almost half of theater screens in North America (National Association of Theater Owners), so these four companies could easily destroy any potential poor Moviepass has.
tl;dr why did i write that
Submitted October 20, 2017 at 11:09PM by HMNYAnalysis http://ift.tt/2yDGh1z
