HMNY with its MoviePass product is a failure. Everyone knows it, investors know it, the company knows it, users of MoviePass know it and the Muppets piling in know it. The company is hopelessly insolvent, losing money in droves, so bad that I will not bother to discuss the prospect for the company or its money losing product. If you want to invest in this company, you would be better off buying lottery tickets. In short, the company is selling an item for $10, that even if used only for three movies per month, will cost it $18 or more, assuming $6 matinee showings. MoviePass looks like it was a variation on ‘build it and they will come’ and valuation was supposed to be based on something like ‘eyeballs’ or ‘page views’ or some other non GAAP measurement of success that management resorts to when they can’t show anyone the money because there is none. The only problem is for a company to do something like Uber, Tesla or Amazon, where the company is able to raise all kinds of money in excess of anything that its financials would normally justify to keep growing in spite of the dismal results, they needed to raise the stockpile of money BEFORE it was apparent what a disaster MoviePass really was and is.
One other popular reference, that somewhat facetiously explains what they should have done with MoviePass, is the NO REVENUE scene from the TV series ‘Silicon Valley’. In that scene, one of the company managers is explaining to everyone at a meeting how the company is going to grow over the next few years. The guy funding them is sort of listening to the meeting but also on an important phone call. The presenter mentions something like, “and we will charge X for our services. . . . .” at which point the VC guy quickly ends his phone call and jumps into the meeting to say, “NO REVENUE! What are you doing charging revenue?” The scene goes on to point out that in today's market charging revenue leads to a company becoming a ‘two times revenue dog’ when it could have had a much higher valuation if there was no revenue for anyone to base an estimate of its value on!
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: I wish I had bought put options are the 1:250 reverse split but never though the stock would fall so fast.