Everyone loves payday. Just like everyone else, once I get that sweet deposit in the bank it starts burning a hole in my pocket. Before much time I am ready to blow it all on a shopping spree. My store of choice is the stock market, and I’m shopping for the best deals on companies. Here is what I dropped my $1,000 on this Friday, June 22nd.
Helios and Matheson Analytics Inc. (HMNY)
The thirteenth pick of the Let’s Be Millionaires investment series goes to Helios and Matheson Analytics Inc. (HMNY).
This 13th pick will mark the official halfway point of the Let’s Be Millionaires “Hail Mary” 2018 investment series. The only way I know how to celebrate this occasion is by throwing my biggest Hail Mary yet. It is extremely possible that this company will go bankrupt and I will have lost $1000. On the off chance that does not happen though, the returns would likely be big.
Helios and Matheson Analytics Inc. is a small data company. Their claim to fame, however, happened when they took a 92% ownership stake in Moviepass last year (Verizon Wireless owns the other 8%).
Moviepass is famous for offering their customers access to as much as one movie ticket per day, every day for $9.95 a month. It doesn’t take a mathematical genius to realize that Moviepass loses money if a subscriber goes to 2 movies a month.
The Moviepass CEO is racing to grow the subscriber base to such a size that Moviepass itself will become a big enough player in the industry to command discounted tickets and even a cut of concession revenues. Helios and Matheson, true to their data roots, also believes there would be significant value created from being able to monitor the consumer behavior of millions of movie goers.
The company also makes the argument that the reduced price that moviepass provides ultimately causes more people to go to the movies, especially smaller independent films.
Moviepass is HMNY’s largest venture by far. For the purpose of this article I will focus solely on Moviepass.
Check out Moviepass here.
Check out Helios and Matheson Analytics Inc. here.
About The Stock
HMNY stock has been on quite the ride over the past year. The real craziness started back in August of 2017 when HMNY acquired a majority stake in moviepass amounting to 92% of the company. HMNY stock was trading at $2.50 a share at the time of the announcement and over the following two months proceeded to climb to an all-time-high of $38 per share. Timed perfectly, that would have been a gain of over 1400% in less than two months.
Since that peak the stock has had nothing but trouble due to the company bleeding cash from all of the movie tickets they are buying. HMNY stock now sits at $0.34 per share at the time of writing, or a 99% decline from its peak. Many analysts and onlookers believe that the company will go bankrupt in short order due to the unsustainable nature of the Moviepass business model.
Today I acquired 3000 shares of HMNY, for $1000. It is crazy to think that just over 8 months ago that same purchase would have cost me over $100,000. This is a true Hail Mary. All the experts seem to say its going to zero, so this feels a lot like I am placing a chip on one number and spinning the roulette wheel. I am almost certain to lose, but if I win, I expect to win big.
The company currently has no positive earnings and therefore does not report a P/E ratio. The current market cap is around $40 million. This stock would be categorized as a domestic, hyper-growth, nano-cap tech stock.
The Speculation
I think i’ve spent almost 10 hours of time reading opinion articles and watching different videos and interviews with regards to Moviepass in preparation for this pick. This has got to be the riskiest stock I’ve ever invested in.
The Moviepass CEO is a former Netflix exec so he has already grown a small tech company into something amazing once before. His confidence in Moviepass and charisma has actually convinced me that he will be able to raise the capital necessary to help Moviepass stave off bankruptcy long enough to realize profitability through creative avenues.
Mark Cuban’s theater chain, Landmark Theaters struck a partnership with Moviepass a few months ago. Moviepass has also begun to co-invest in the creation of movies. Lastly, management has shown that they are trying to work towards profitability by rolling out some creative pricing changes and announcing new bundles.
The speculation here is really just that this company doesn’t seem ready to die. It will definitely be an uphill battle but for the sake of my investment and everyone who is currently enjoying the ability to see unlimited movies for $9.95 a month I hope they succeed. If not, I will have the joy of knowing that I bought 100 strangers a free ticket to the movies.
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2018 Investment Series Post 10