Something odd happened in the trading of Helios and Matheson Analytics Inc. (NASDAQ: HMNY) in late-September. Volume started picking up and the stock broke out of its $2.20 - $3.00 trading range. By mid-October, the stock soared to as high as $38.8. What is so great about HMNY’s MoviePass?
Helios owns over half of MoviePass, with its $28.5-million investment. MoviePass has never made money since its inception. The more consumers use MoviePass to get free movies, the more money the company loses. This is not sustainable. Investors should instead look at movie production theatre stocks, like AMC Entertainment Holdings, Inc. (NYSE: AMC).
Instead of having market cap in the sub-$150 million range, AMC is worth $1.77 billion.
If MoviePass really causes an increase in movie ticket purchases, then AMC would benefit. Other options include Cineplex Inc. (OTCBB: CPXGF) and Regal Entertainment (NYSE: RGC). AMD will report quarterly earnings on November 3.
In late-September, AMC said it would invest $20 million to develop virtual reality-based entertainment. This is a low-risk bet that diversifies the business outside of movies.
Takeaway
AMC’s not deep value and competes with streaming video. Netflix (NASDAQ: NFLX) is growing at a rapid pace and the movie-going experience could fall. But AMC has better prospects than Helios’ MoviePass.
