July 16, 2018
NEWS ANALYSIS – Helios and Matheson Analytics (HMNY), 92% owners of theatrical ticket subscription service MoviePass, saw shares plummet 26% at the market close to a record low 11 cents per share.
In a day that saw more than 82 million shares trade hands – nearly four-times the daily average – HMNY continues to be dogged by MoviePass’ loss-leader business model that is a boon to subscribers – but not the bottom line.
The company has been burning through more than $20 million monthly paying exhibitors face-value for every ticket used by subscribers. MoviePass, with more than 3 million subscribers, remains a gift to everyone – except itself.
Last week, HMNY CEO Ted Farnsworth played the crying game, telling the media AMC Theatres and others were making a concerted effort to put MoviePass out of business through scare tactics.
“Of course, we’re burning cash, but so does Amazon,” Farnsworth told The Street. “And then there’s Netflix, doing original content and losing $4 billion this year.”
Actually, Farnsworth would love to have Netflix’s “losses.” The service is a money tree, generating $674 million in profit on revenue of more than $7.6 billion. What the HMNY CEO was probably alluding to is Netflix’s projected $3 billion-to-$4 billion negative free cash flow. Netflix expects to end the year with more than $8 billion in debt.