The Ultimate Lotto Ticket That Everyone Should Own: $HMNY

I’ve changed my mind about HMNY, the holding company for Moviepass who owns 53.7% of the company. Led by one of the co-founders of Netflix, Moviepass is growing very rapidly — boosting subscription levels from 20,000 in September to 400,000 by August. They’re expecting to get to 2.5 million by year end.

Why the fuck aren’t we buying this ultimate lotto ticket?

This from Credit Suisse:

“The key question for gauging the potential impact of MoviePass on the industry is how much leverage the service may eventually have over theaters to share ticket and concession revenues,” Credit Suisse wrote.

Credit Suisse said that MoviePass’s business model is based on building up a subscriber base large enough that the startup can eventually go to the movie theaters and ask for a cut of their business.

Credit Suisse thinks that up to about two-thirds of the current movie-goer population in the US could eventually buy a MoviePass subscription, which would equal about 20 million people. If MoviePass can achieve those levels, it would have significant leverage over the theaters, and would likely ask for some cut of the ticket and concession sales.
If the theaters say no, MoviePass could steer its subscribers away from certain theaters by offering discount packages with local businesses, Credit Suisse said. Credit Suisse said MoviePass could offer a discount to a local restaurant if a user goes to an AMC theater instead of a Regal Cinemas theater, for example.

Credit Suisse estimates that 20 million MoviePass subscribers would purchase up to 180 million tickets annually, which would be about 27% of the theaters’ total ticket sales. If MoviePass is able to control a third of a theater’s business, Credit Suisse thinks that it would have sufficient leverage to ask for a 10% or 20% cut of the theater’s ticket and concession sales. A 10% cut could dilute the theaters’ earnings before interest, taxes and amortization by up to 6%, according to Credit Suisse’s calculations.

Shares plunged today and again in the after hours, as the sentiment shifted and the air was let out of the recent run.

But if history is of any use, this is exactly the time to buy a feverishly exciting momentum stock — when no one else wants it.

Even Citron covered their short today, knowing that this thing can rip their fucking faces off with indecorous savagery at any moment.

Covering $hmny. Don’t like to stay short companies that are expected to lose money high borrow $ hit tgt price in one day. all timing

— Citron Research (@CitronResearch) October 12, 2017

“We knew this going into it with our business model that we would go out there and raise more money for MoviePass and right now I think especially with so much going on with the stock it’s a lot of excitement around.”

Analysts say a surge in MoviePass subscribers from 20,000 to more than 400,000 between mid-August and mid-September suggested company targets of 2.5 million subscribers next year may prove overly conservative.

Farnsworth declined to give an updated figure for subscriber numbers or the company’s targets, but said the numbers using MoviePass every day were now in the tens of thousands.

“We are wide open and more than flexible, but that’s our plan right now,” Farnsworth said.

The number one risk to Moviepass is a break of apathy amongst cinema goers, causing them to frequent theaters often, stacking up losses on their balance sheet. Like a gym membership, Moviepass is counting on American apathy, seldom visiting theaters, but keeping their plans in place.

The way they win is by greatly affecting theater attendance, which would put them in a position to negotiate better deals with them. Imagine if they could make up 20% of all theater goers. I’d bet the barn they could then negotiate lower expenses for themselves, and possibly squeeze concession royalties too.

At $111 million market cap, you’re buying this concept for a song.

Let’s try to read into this best we can.

AAOI makes most of their money selling equipment to datacenter, Amazon being their biggest customers, for 40g technology. The reason why people were buying AAOI was for the upgrade cycle to 100g. In the past, the company missed earnings, likely due to the upgrade cycle taking longer than expected. It is also possible that Amazon is squeezing them or using other vendors to reduce costs.

Either way, they just offered a terrible warning, which is bound to send shares swimming lower. This does not mean, however, the play for 100g is over. It merely means AAOI isn’t executing and is likely being squeezed by AMZN.

Applied Optoelectronics prelim Q3 $1.04-1.09 vs $1.31 Capital IQ Consensus Estimate; revs $88-89 mln vs $111.53 mln Capital IQ Consensus Estimate

“Our preliminary results for the third quarter fell short of prior estimates and were negatively impacted by lower than expected sales to one of our large datacenter customers. Despite this shortfall, we maintained a strong gross margin profile in the quarter, and continued to experience solid demand with our other top datacenter customers,” said Dr. Thompson Lin, Applied Optoelectronics, Inc. founder, president and CEO. “Although we are disappointed with these preliminary results, we continue to feel good about our leadership position in advanced optics and remain optimistic based on the customer traction we are seeing with our 100G products, especially our 100G CWDM transceivers.”

This is reminiscent of when Apple used to squeeze their vendors.

Watch competitors for pin action: LITE -3.99% OCLR -2.67% NPTN -1.92% FNSR -1.71% ACIA -1.00%

HMNY announced they were upping their stake in Moviepass to 53.7% today. On the surface, the idea of Moviepass is wonderful, purely from a consumer point of view. Since I am busy, at best, I could venture off to the movies once per weekend, netting 4 movies in total. With Moviepass, I could realize $40 in value for just $9.95 per month. From Moviepass’ point of view, I will grow weary of visiting theaters, visiting them less than once per mo, allowing them to profit.

But where they can truly make money is by negotiating better deals with theaters and perhaps getting a piece of the concession stand. For now, they are paying full boat. My guess, they will continue to do so until they gain leverage.

Shares of HMNY are plunging lower today by 36% after discussing the many risks associated with Moviepass’ hard road to hough.

Risk Factors Relating to MoviePass: “[MoviePass] has experienced significant net losses since its inception and, given the significant operating and capital expenditures associated with its business plan, anticipates continuing net losses and significant negative cash flows for the foreseeable future… To achieve and sustain profitability, MoviePass will need to accomplish numerous objectives, including substantially increasing the number of paying subscribers to its service and securing additional sources of revenue and economies of scale. There is a significant risk that MoviePass will be unable to achieve these objectives, which would damage MoviePass’ business and could lead to the loss of Helios’ investment in MoviePass. MoviePass currently spends more to retain a subscriber than the revenue derived from that subscriber and MoviePass currently does not have other sources of revenue. This results in a negative gross profit margin. MoviePass expects its negative gross profit margin to remain significant until MoviePass can generate other sources of revenues to offset the losses or achieve substantial economies of scale. There is no assurance MoviePass will be able to generate other sources of revenue or be able to achieve economies of scale that would reduce the cost of revenue sufficiently to generate a positive gross profit margin.”

I’d posit this run in Bitcoin is inherently bearish for the overall health of the crypto world. It’s as if big sellers have decided to cash in their chips in the fraudulent ICO market, clearing back to BTC. How else do you explain a 10% rise in BTC, zero gains in ETH and a decline in all of the biggest capped ICOs?

I’ll tell you why. The ICOs are about to be destroyed, simple. If you don’t accept this analysis, go ahead and buy some Dogecoin or RARE PEPE CASH and hold for the long term.

I’m listening to Hans Zimmer show tunes, death casting for the entire healthcare industry to be destroyed. This is a safe zone for all of you no good rotten bastards. Do not fret political jargon or divisive rhetoric; I am done with that phase of my blogging career. But, if you happen to be long LEGACY healthcare and are hoping and praying for Obamacare or Trumpcare to succeed, I will kill you where you stand.

The only solution for America’s healthcare is to crash the entire industry, leaving no survivors. When the profligate profits at HCP and ESRX are sapped, reducing those stocks to zeroes, only then we will have an acceptable form of healthcare.

To become a physician is one of the most noble careers any man or woman can pursue. These people are placed on pedestals and revered by Americans for their special skills, rightly so. HOWEVER, they should not take the gifts they are endowed with and squander them through unchecked greed and sin. Being a physician doesn’t entail ruining others, through a corrupt system that charges $20 for a single aspirin.

Hence, I am long the only stock that goes higher as the industry cracks.

We will continue to buy HIIQ until America’s healthcare system is in ruins, make inordinate sums of money in the stock and then take said gains to buy the ashes of a new system. This can only come to fruition once Obamacare and its corrupt programs have been washed away, dispatched into the annals of failed policy.

Twitter has gotten so bad, I’m afraid to tell people to fuck themselves these days. Just a few short years ago, I could blaze through Twitter telling everyone to ‘fuck off’ in a demonstration of true victory, now I’m forced to step on egg shells, kindly asking people to ‘simmer down’ and to respectfully ‘jog on.’

Rose McGowan is an outspoken actress against the pervert Harvey Weinstein, because she was victimized by him. Now Twitter shut her the fuck down for stirring up trouble. Good job @Jack.

Her most recent adventures was into outing Benjamin Affleck was being A FUCKING ASSHOLE.

WTI is off 1.5% — but gold is higher by 0.7%, so everything is just in the world. Bitcoin is higher by 8%, now above $5,200. Fred Wilson must be pleased. Nasdaq futs are -8. I really need to circle back to Bitcoin and not gloss this over. The type of returns being enjoyed in the cryptos makes stocks looks like CDs. This shit is out of control and crazy. There I said it.

HMNY increased their stake in Moviepass to 53.7%.

The co announced that, since August 15, 2017, it has received aggregate gross cash proceeds of approximately $12.8 million from the holder of its senior secured convertible notes, thereby satisfying the $10 million financing condition to HMNY’s pending acquisition of a majority stake in MoviePass, which was announced in August 2017. HMNY also announced that it has agreed to increase the purchase price for its stake in MoviePass from $27 million to $28.5 million, which will increase its ownership stake in MoviePass from 53% to 53.71% upon the closing of the transaction. HMNY agreed to make the additional $1.5 million investment in MoviePass for an additional 0.71% ownership stake based on an agreed $210 million pre-money valuation of MoviePass.

In conjunction with the additional investment, MoviePass also granted HMNY an option to purchase additional shares of MoviePass common stock for $20 million in cash based on the agreed $210 million pre-money valuation of MoviePass, pursuant to an option agreement, which, if exercised in full, would amount to an additional 8.7% ownership stake in MoviePass as of the date of the option agreement. If HMNY were to exercise the option in full prior to the closing of the transaction, its total ownership stake in MoviePass would be 62.41% as of the date of the option agreement.

In connection with increasing its investment commitment to MoviePass, HMNY provided $6.5 million in cash to MoviePass on October 6, 2017, consisting of an advance payment of $5 million that would have otherwise been due within 90 days after closing the acquisition transaction with MoviePass plus the additional $1.5 million investment amount, for which HMNY received an amended and restated convertible promissory note of MoviePass in the amount of $11.5 million, which superseded and replaced the $5 million convertible promissory note issued by MoviePass to HMNY on August 18, 2017.

Some other notable headlines:

Citigroup prelim Q3 $1.42 vs $1.30 Capital IQ Consensus Estimate; revs $18.2 bln vs $17.87 bln Capital IQ Consensus Estimate

Domino’s Pizza prelim Q3 $1.27 vs $1.23 Capital IQ Consensus Estimate; revs $643.6 mln vs $627.85 mln Capital IQ Consensus Estimate

Netflix target raised to $230 at Stifel ahead of earnings

JPMorgan Chase beats by $0.10, beats on revs; Reaffirms 2017 Outlook, narrows NCO expectations

Transocean upgraded to Buy from Neutral at Citigroup

Wal-Mart removed from Conviction Buy List at Goldman

FLASH: Profits from the sale of “The Fly’s” book will be put towards the Orbital Space Cannon (OSC) project, designed for offensive purposes only.
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I’d like nothing more than to discuss my intellectual superiority over you, the juxtaposition of an untrained animal against the highly cultured and meaningful intellectual of “The Fly.” Sadly, I cannot do that on this very day.

I’ve been miserably dispatched in several stocks today, amidst the red cannon fire of a roaring bull market.

I was fleeeced for more than 6% in HIIQ today, thanks to President Trump and his weak strategy to kill Obamacare. I was up more than 10% on this trade yesterday and have given it all back, and more, since yesterday. My paper losses are grievous and well deserved.

In my quest to finance cigarettes of a ‘modified risk’ varietal, I’ve had my face seared by two dozen real ones. And here I am now, fanciful and wise, yet smoked out in XXII hoping for a lesser form of cancer to save me from what looks like another bad trade.

All of my gains in YELP have been washed away and now I’m slightly down. This is one of the 4 horsemen of certain death, a member of an infamous set of stocks that cracked me asunder in the winter of 2014 — sending me to an early shower and nearly to my grave.

Almost all of my gains in EDIT are now gone, after running up strong from my initial purchase. In all of my infinite wisdom, I let one in the hand escape me because I was much more interested in two in the bush.

My other stocks are up and my quant investments continue to provide me with a steady source of cash flow and performance. But before I am able to stand here, thundering over you because of my prowess, I first must establish the arc — demonstrating that I too am fallible and could, in fact, lose GOBS of money in an otherwise aesthetically pleasing market.

Seasonality fags get in here. This one is for you.

There are various reasons why certain stocks and sectors do better during certain times of the year. Without getting into the philosophy of why this occurs, let’s just look at the damned numbers, god damn it.

For October, here are the top 5 sectors and their average returns.

Regional Airlines +6.7% (ALK, JBLU, CPA)
Major Airlines +5.3% (DAL, LUV, RYAAY)
3-D Printing +4.5% (DASTY, PRLB, DDD)
Technical and System Security +4.4% (VMW, INFY, ADSK)
Security Software and Services +3.7% (CHKP, SYMC, PANW)

The worst…

Silver -4.3% (PAAS, CDE, HL)
Gold -3.5% (NEM, ABX, FNV)
Biotech -3.4% (BLUE, NBIX, EXAS)
Hospitals -3.2% (HCA, UHS, SEM)
Shipping -3% (KEX, GMLP, MATX)

Data provided by Exodus

We haven’t had any real inflation, net of population growth, in quite some time. For years, I feared the deflationary vortex, which was being worsened by wage stagnation and exportation of high paying jobs, was going to doom us all. The dichotomy between the have and have nots has progressively widened, which hasn’t meant a damned thing for stocks.

Without question, there has never been a wider chasm between Main Street and Wall Street than now. In the past, Wall Street sort of needed Main Street to drive business and produce profits, but not anymore. In a globalized economy, Wall Street merely needs Main Street to stay alive. AI and technology innovation is the main driver for higher profits. Foreign factories and a wide open immigration policy has led to lower wages, or at least stagnated them, in turn leading to higher profits.

Due to the high tax burden, regulations et al, big business has been provided with an impregnable moat that staves off competition. The big media push, via Google, Facebook, Twitter, NY Times and Networks protects these interests and promotes a socialized agenda that only serves to increase the power of the American oligarchy.

In a sense, capitalism is dead in America and has been dead in Europe for a long time. We’ve entered an era of autocracy, led by technocrats, and hardly anyone is aware that it happened.

Central Banks control the flow of money, helping banks earn easy profits that also stops them from putting money to work in the economy. And, through all of this obfuscation, stocks hit record highs, which in turn produces higher tax receipts, in turn helps keep the charade going.

The mechanization of this scheme is impressive and people won’t truly analyze what is going on until it crashes. In the meantime, we buy stocks because it’s easy and those of us who do not are ostracized and hated.

Stock Market has increased by 5.2 Trillion dollars since the election on November 8th, a 25% increase. Lowest unemployment in 16 years and..

— Donald J. Trump (@realDonaldTrump) October 11, 2017

…if Congress gives us the massive tax cuts (and reform) I am asking for, those numbers will grow by leaps and bounds. #MAGA

— Donald J. Trump (@realDonaldTrump) October 11, 2017

Now that Amazon has seized control of all the organic foods in America, Credit Suisse is calling for another dramatic leg up in its shares — which can only spell dread for KR.

“The product development perspective is that while most of the headlines around the Whole Foods acquisition have been about price cuts, we believe the real path for Amazon to create lasting shareholder value is through fulfillment and delivery via Prime Now,” analyst Stephen Ju wrote in a note to clients Wednesday.

“Hence, while price cuts capture the headlines, we submit that Amazon will wage war with its competitors with service instead.”

Amazon’s real play here is Prime, expanding into Prime Now, which offers free 2 hr delivery.Currently, Prime Now is available in 198 out of 393 Whole Foods locales.

“And as the consumer value proposition for Amazon has always been the combination of price, selection, and delivery we believe the current headlines about price reductions at Whole Foods will be accompanied by expansion of Prime Now delivery-enabled zip codes,” he wrote.

Credit Suisse upped their price target to $1,350 from $1,00 this morning.