I don't just show ya'll the smart things I do. This blog is all about showcasing the shit ideas and things that never should have been. Like this ill-advised investment in Moviepass, AKA Helios and Matheson.
I advise - strongly - buying indexed funds that hold broad swaths of multiple sectors. Normally, I follow what I preach; something like 99.7% of my assets are invested away in things like SPY ETFs and Vanguard S&P500 index funds. But I'm not perfect.
Last month, I decided to make a play. You see, for a while I'd been using Moviepass, the movie-a-day subscription plan. I liked Moviepass, both as a customer and as a potential investor. Yes, it was losing tons of money, but all tech companies do in the early going. Moviepass was disrupting an industry with a very old business model. They were growing quickly, having reached several million members, and I saw clear paths to monetization (surcharge pricing, advertising, discounts for steering people to chains and/or attending movies later in their life cycle). Moreover, AMC and a few other groups launched copycat services, which trailed Moviepass in total subscribers by a wide margin.
The stock was languishing at around 12 cents a share, down from a high of 40 dollars or so. It was risky, but I decided that, if Moviepass was able to survive in almost any form, there was money to be made. It was, in my mind, a Netflix-esque move, all or nothing.
So I went against my better judgement and bought 4,000-ish shares (about 400 bucks worth). Not a lot of cash (which is, as we'll soon see, fortunate), but not a trivial amount either.
The chart above details the subsequent fall. After I bought, the shares oozed down about a third. Then, since Moviepass was trading at less than $1/share (you have to be higher than that to avoid being delisted on the NASDAQ), the company performed a 250-to-1 reverse split and I was left with approximately 12 shares worth $25 each.
The next day, the shares crashed to $10 a share, gobbling up half my investment. Then to $7 and then quickly to $2, $1 and finally, as of ten minutes ago, 10 cents a share. My initial $400 investment is now only $1.20. To make things just a little worse, I bought this in a retirement account, so I'm unable to sell the shares at a loss to get a tax break.
The decline is probably reasonable, due to a series of (for me) poorly timed problems. Moviepass ran out of money one day. Just ran out of money and didn't pay their bills, crashing the app. Their app crashed multiple times (ostensibly for other reasons) and they started doing desperate things for money, like adding huge surge pricing to each "free" ticket and limiting access to popular films and an announced plan to raise subscription rates. Behind the scenes, I'm sure they're having a terrible time securing capital now that everyone sees the trouble they're in.
The end result is that they've alienated subscribers, who are probably fleeing to more stable platforms. Undercapitalized and in a state of disarray, they're no longer a trustworthy company. I will probably unsubscribe when my current month is over, knowing full well that there's a long period before I can rejoin.
As for the shares, I'm in it 'til it's over, probably later this week.
The bard said it best: "Now cracks a noble wallet. Good night, sweet Moviepass; and flights of subscribers sing thee to thy rest."
Noah's Inner Monologue
Scribblings of a man who can barely operate an idiotproof website.