Summary:

MoviePass has four attractive attributes which serves to nullify most bear arguments.

MoviePass will be worth $10B if they reach 20M subscribers and if given a $500/subscriber valuation.

Bears who only consider the math of the business model as it stands today, either don’t understand what makes a good investment or have ulterior motives.

The most legitimate risk which deserves discussion is that MoviePass trades through a proxy, Helios and Matheson Analytics (HMNY), rather than on it’s own.

There has been much written about MoviePass and it's launch of it's $9.95unlimited subscription plan since August 15th, particularly in regards to it's business and pricing model. The bear thesis has been debated herehere, and most recently here with the discussion surrounding the economics of a $9.95 unlimited plan.

In this article I will present you with four key MoviePass attributes which all-but guarantees it’s success and which renders all debate about pricing and business models completely moot. But before I do that, let’s be clear about why it’s a great folly to try and calculate the profitability of the current business model:

  1. We don’t have the required data: No matter how much research we do, we will never be privy to the numbers required to make an accurate determination of how the economics of the business are doing today. There are just far too many variables involved and in most cases, bears are making assumptions which cannot be relied upon. This deserves a whole separate article on it’s own.
  2. Business models change over time: It’s naïve to believe that today’s business model will not change. As the company achieves critical mass and scale, business and pricing models can rapidly change; often without additional significant capital investment. Can you even think of any tech company that isn’t entirely different today than it was at inception? In short, when we invest in MoviePass, we are not betting on today’s business model. In a moment, I’ll tell you what we are betting on.

Read full article here