'Shocker' Of The Day: 'Tech' Company That Buys Movie Tickets For $10 And Sells Them For $0.33 May Not Survive

Tyler Durden's picture

Over the past 4 weeks, the stock of a tiny New York based "IT service management" company, Helios & Matheson Analytics, Inc., has surged just over 1,300% after announcing plans to purchase a majority stake of an "innovative and disruptive technology company" called MoviePass at a $210 million valuation.

So how exactly does MoviePass, the "innovative" and "disruptive" tech powerhouse that it is, plan to change the entertainment world forever, you ask?  Well, apparently by paying movie theaters $10 a pop for movie tickets and then re-selling them to their own monthly subscribers for a small 97% discount, or roughly $0.33 each (in the worst case scenario). Per Bloomberg:

The company sells a monthly subscription that gives moviegoers a daily pass to movie theaters for $10 a month - though MoviePass is paying theaters full price for tickets, which can cost $10 apiece or more.

Genius plan, right? 

MoviePass

And while the company planned to supplement its top line with advertising revenue and deals with theater chains to share in concession sales, at least according to Bloomberg, a problem developed when its subscriber base ballooned from nearly nothing to 400,000 in a matter of weeks.  Unfortunately, at least when you're business model is dependent upon selling your primary product at a 97% loss, the more 'successful' you are the more money you lose.

And while the ending of this particular movie seemed obvious from the start, it apparently eluded Helios investors until today when the company announced that the business they just purchased 4 weeks ago may not survive...all of which sent their stock plunging by 40%. 

Helios & Matheson Analytics Inc., the backer of the controversial $10 MoviePass subscription, fell as much as 21 percent after warning the money-losing cinema service may not make it.

 

Helios boosted its support for MoviePass to $11.5 million from $5 million as part of an August deal to acquire a majority stake, according to a regulatory filing. At the same time, Helios said MoviePass’s auditors are expected to warn of substantial doubt about its ability to continue as a going concern.

Who knew that massive cash losses could be considered detrimental for a tech company?

MoviePass

Just to put this problem in perspective, lets apply some math to this case study on how not to run a business.  Lets assume that each of MoviePass's 400,000 subscribers decide to see 2 movies each week (they're entitled to one movie pass a day...but lets just assume they only use 2 per week) at a cost of $10...that's a total cost of $32 million each month.  Now, each of those subscribers are paying $10 per month for their service which means MoviePass is collecting $4 million in revenue and burning $28 million every single month or $336mm per year...and that doesn't even count their staff and other overhead expenses which we're sure are considerable.  Does that sound like a business plan that might be of interest to you?

Meanwhile, even AMC, undoubtedly one of the biggest beneficiaries of the bizarre MoviePass business model, said that the company was "unsustainable."

MoviePass sparked an outcry in the movie business after cutting the price of its movie subscription plan to just under $10 from $30. That led to a flood of sign-ups that the company struggled to keep up with. The biggest movie-theater chain in the world, AMC Entertainment Holdings Inc., has said the plan is unsustainable -- because MoviePass is paying exhibitors full price for tickets -- and was looking to block the deal.

Sorry guys, only Bezos and Musk are able to sell products at a massive loss, in perpetuity, without investor backlash...

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hotrod's picture

Sorry guys, only Bezos and Musk are able to sell products at a massive loss, in perpetuity, without investor backlash.

 

ahahahahaahahllolololoroflrofl roflhahahahhahahaahahahahh

junction's picture

Imagine how much bigger the company's loss would have been if Hollywood was releasing movies people wanted to watch.  I wonder if someone has grabbed the rights to the movie title "The Harvey Weinstein Story." 

Freddie's picture

Anyone actually go to a movie house?  I have not for probably 8 years.  The people who go to movies are nerds and creepers.

I would like to see the new Blade Runner cause I like Ridley Scott even though he is not directing.  Rutger Hauer made the first movie.  This new movie cast looks lame.

auricle's picture

Analytics is the new buzz word. This is the only reason why there was any interest in the company. Surely it was not the business plan investors were investing in. 

PT's picture

Makes Milo Minderbinder look like an amateur.  But Milo actually had a "reasonable explanation" in the end.  Maybe there is something else going on too.

There should be a few moar companies like this in the world.  I'm sure I could do good trades with them.  :P

Manipuflation's picture

We don't and you are correct.  Bladerunner was cool but this retread looks like crap.

Only 8 years?  I am at 18 years of never going to movies and am going for much longer.

jaxville's picture

  I still go to the odd movie but only at the cheapee theater.  In spite of my best efforts to vet a movie, often I find myself walking out in disgust in the first ten minutes. 

    It's almost impossible for Hollywood to make a movie and not insert faggotry or holohoax/evil Nazi nonsense.  Adventure has been replaced with gratuitous violence and romance with gratuitous sex. 

 

 

Clowns on Acid's picture

Surely you mean "groping" the rights to the movie title "The Harvey Weinstein Story"

Offthebeach's picture

$10/mo for about 30 crap movies?

Too much.

Although Tawanna and DeSawn dropped off all weekend at the Dump-O-plex is a good deal for moma Latesha.

VD's picture

this is exactly how bitcoin charts will look. similar pump no doubt.

tmosley's picture

And it would recover in under a month.

You can't wish it away. No matter how many bitter tears you weep into your pillow.

ACP's picture

Exactly - they must think they're the government, or something.

Seasmoke's picture

Its a Mad Mad Mad World. 

Yen Cross's picture

  I went into the Tesla wedsight and called some of the dealers they have in California.

  First of all I'm NOT going to go into specifics, but there's certain ZONING requirements for auto dealers.

   I know because I've owned dealerships.

   THese so called "showrooms" that Tesla has, are so Illegal, and don't even conform to "basic" DMV display laws!

 Even as a wholesaler, or distributer, you need to have a certain amount of space available. Tesla is probably using / piggybacking on detaling shops, and boutique car repair shops, and offering kickbacks to the struggling owners!

   The ZONING isn't even correct! Tesla is selling cars in " Retail Malls" and has no lease agreement for storage, and access.

 

 

Manipuflation's picture

The 572 Chevy Big Block is off the charts American.  It just sounds right because it is right.

 

https://www.youtube.com/watch?v=hjoCT6YvNnE

Freddie's picture

LOL!  Poor California.  They piss away tens of billions on illegals and bullshit.  Apple, Tesla and others pay no taxes. The US govt spends hundreds of billions on fake wars and shitty planes and ships.

The poor people of Califorinia are living in a fiery hell when the state and Fed govt could have had 20 additional water bombing fire fighting planes dropping water to stop these hellish fires.  The Feds should have another 20 firefighting water bombing planes for all of the USA because they would be needed all the tim ein the western USA.  Instead we waste billions bombing Syria, Iraq, Libya and other bullshit.  We should be water bombing California to save people, animals and homes.

We cannot have that but we can have Apple dodging tens of billions of taxes with offshore tax dodges in Nevada.   Cannot have that when we give Elon Musk billions in tax subsidies al9ong with Hollywood who pays no taxes.

Yen Cross's picture

  You're preaching to a conservative Kalifornian, my friend.  The tide seems to be shifting slightly'

  It must be all that hidden inflation?  Thanks for your comment.

Clowns on Acid's picture

Think about it...CA is trying to legislate mandatory EV's (TSLAs) and outlaw ICE's (internal combustion engines). With a present State debt of approx $250B they are doing away with cars using gasoline which CA collects massive taxes on gas, and replacing them with EV's which they will forgo the gas based tax revenues while spending $ Billions more on EV subsidies.

Kinda sounds like the Movie Pass buisness.......   

buttmusk's picture

how could commiefornia put rules on someone who is "saving the world"?

MADARA's picture

it was pleasure to ride this stock for 1000% gains.

Manipuflation's picture

The movies suck anyway.

onmail1's picture

The game plan is this:

They want more customers

becuz

more customers == more valuation

of the company

(even if at loss)

So the solution is:

1. QE  or

2. Selling the company to make big money

Juggernaut x2's picture

Phase 1. collect underpants

Phase 2. ?

Phase 3. profits

mastersnark's picture

Now I'm feeling a little nervous about the grilled cheese food truck business I just bought.

Golden Showers's picture

"The Shocker"

https://en.wikipedia.org/wiki/Shocker_(hand_gesture)

Here I am in a leather apron with blood and guts all over me and here's you.

Actually, I'm lying. But I don't have a broker.

jamesmmu's picture

how many can be awaken by this news?

 

Hongcha's picture

Reminds me of Webvan; who took a loss on each and every home delivery.

"We'll make it up in volume."

gouyou's picture

Not a new business model, in France Pathé Gaumont offers a cinepass for 20€/month with unlimited tickets. The business model is similar to fitness studio, people buy unlimited access, but never really use it... There is one big difference: Pathé Gaumont owns the theaters and produces/distributes a lot of the french movies.

artvandalai's picture

I'm going to arb NFL tickets. Anybody in?

Beaker99's picture

I have two words for these clowns.

 

Fucking. morons.

Shrike99's picture

Early retiree... I've been using the shit out of my card since theater is near my house.

Seeing all sorts of stuff in afternoons. I'll go see whatever.

Hell, I went to see friggin' "Mother!".

Not afraid to walk out 10 minutes into a movie if it's crap.

 

Blazing in BC's picture

I would not watch Hollywood movies in their theaters if they paid me

Yen Cross's picture

   Based on what I've read, " Tards" gonna be "Retarded". I made some money trading sideways  this week. When a new trend starts, stay clear of me.

    I'll bet my mailbox is going to be full tomorrow morning.

Blurb's picture

The stock of Helios & Matheson Analytics dropped because the moron detectors started blinking and beeping. However, the plan of Moviepass was simple: create a website TO DO SOMETHING, and provide strong incentive (free stuff) so that LOTS of people to sign up for it.

 

Then market your idea based on subscribers and buzz. Cash out, and ... bye and good luck, suckers.

 

Bubbles cloud judgment

White Devil's picture

PFG (Pretty Fuckin' Gay)

JailBanksters's picture

Not $6.66 but .33 instead

bud-wiser's picture

Bought 1k shares monday, at 19.30. Sold wednesday afternoon for 34.44. 15k return. Whew....Yesterday was a bloodbath! I guess you better listen to citron when they short. 

xear's picture

If a theater seat is unfilled that seat is a total loss. I doubt the plan was ever to always pay $10 per seat to the theater.

Also, anyone seeing even one theatrical release hollywood movie is unlikely to go back again so the business model likely had more to do with making cancellation difficult than any idea this would actually take off.

 

.

TheSilentMajority's picture

Same money-losing business model as Uber, Tesla, and Amazon.

Bullish!!

yudd's picture

this thing was so ridiculous i thought it was a fraud, they force you to go to the theatre using GPS to buy the tickets, but their app was not designed all that well, you can use Mock gps to trick it, to show you are within 100 yards then shut it off and purchase from theatre which allow online purchasing, i purchase tickets almost every day just for the points from Regal. and you are right you can just walk out, which is what i was doing when i actually even bother to go which is rare. The movies are barely tolerable and i am so used to watching everything at 2x - 2.5x speed that its a chore to sit even halfway through.

surf@jm's picture

LOL!........

The Unicorn, turned out to just be a donkey with a horn glued on its head.....

Coin Mutiny's picture

They must be making it up with volume.

szey's picture

dude, your assumption is wrong.  Even before they launch the new plan, their customer only go to theater like 3.8 times a month, and those guys are real movie fans.  So the new plans' customer by no way can go to theather more than those movie fans.  I am guesting the current customer base may visit theaters 2-2.5 times a month on average.  But still, lossing tons of money.  Oh, BTW, their cost of tickets are slightly below 9 dollar but not 10.

Bwana's picture

Nobody really goes to a theater to watch a movie if they have a life. The movies are so poorly written and acted it is an insult that Hollyweird wants money to see them. They are no longer "entertainment" but instead a leftist slanted and bigoted political brainwashing session. When American families can't afford dinner out anymore who the hell will pay $10 to $15 to watch garbage in a theater that has not been cleaned for a month. I'll bet they are subsidized by the industry to bring patrons back to going to the movies.