Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having yet another strong day in the market today. However, that’s not what many would expect after seeing yesterday’s declines. As many know by now, yesterday’s declines in the stock had a lot to do with growth that we saw from Netflix, Inc. (NASDAQ: NFLX). This marks the second time that news surrounding Netflix has led to movement in Helios and Matheson Analytics; but should changes in NFLX affect HMNY shares? In my opinion, the answer is no. Before we get to the details, we’d like to give a big thanks to our partners at Trade Ideas for being the first to alert us to the gains. At the moment (9:38), HMNY is trading at $17.00 per share after a gain of $0.68 per share (4.17%) thus far today.
NFLX Has Led To Movement In HMNY Twice
As mentioned above, Netflix seems to be a driving force in the movement we see from Helios and Matheson Analytics. Looking back over the past month, that becomes clear. The first instance of this phenomenon came early in the month when Netflix announced that it would be increasing its prices. At the time, the company announced that it would increase its prices for its mid-tier and top-tier services by $1 per month and $2 per month respectively. When this happened, investors started to compare the two services, and since HMNY was priced lower than the mid-tier and top-tier services at NFLX, investors went into a frenzy, sending Helios toward the top.
The second instance of this phenomenon came just yesterday. Yesterday, news broke that NFLX added 5.3 million subscribers in the most recent quarter, blowing away guidance of 4.4 million users. Many believed that this underscored the issues that HMNY would face when competing for the attention of movie watchers. As a result, the stock fell dramatically.
Should We Really Be Comparing Helios and Matheson To Netflix?
This is a big question, and one that’s best answered early on in the run. In some ways, it’s clear that NFLX and HMNY are competitors. First and foremost, both companies focus on bringing movie content to consumers at what can be considered a discounted rate. On top of that, both services provide unlimited movies for the cost of one low monthly fee. However, is there really a comparison here? The truth is that comparing the two may prove to be a big mistake. Here’s why:
- The Services Are Completely Different – When we dig into what the two companies offer, it’s clear that the services offered by these companies are completely different. Sure, they both charge a single monthly fee for the rights to unlimited movie content. However, they differ in how that content is delivered. At the end of the day, NFLX delivers the content through the web and into the home while MoviePass from HMNY delivers the movie content through the movie theater. This is a key difference because consumers enjoy going to the theater, and in general, pay more than $10 per visit to do so. For the consumers that visit the movie theater on a monthly basis, MoviePass is a clear win because for less than the cost of a ticket monthly, they can go as much as they want, watching as many movies as they’d like.
- Money Is Made Differently – Another big key here is how money is made. Sure, both companies drive revenue from the monthly fees that they charge to consumers for the use of their services. However, that’s not the only way that HMNY makes money off of its subscribers. At the end of the day, we’re in a world driven by big data, and Helios and Matheson Analytics plans to exploit the data they drive for a profit, selling it to companies like Uber, restaurants, and others.
I Won’t Knock NFLX, But I Won’t Discount HMNY Either
At the end of the day, Netflix is an incredible business. One that has proven success and continues to grow. However, comparing NFLX to HMNY is like comparing apples to oranges. Sure, they’re both fruits, but they are very different fruits.
At the end of the day, any time a new service proves to be a smash hit, as Helios and Matheson Analytics’ MoviePass has, there are going to be the naysayers, the haters if you will. However, it’s hard to discount the success that HMNY has already amassed in the 2 months since they’ve acquired the majority stake in MoviePass and the success that the company is likely to have moving forward.
This success will be driven by 3 factors in my opinion:
- Strong Revenue – MoviePass is a revenue generator. With more than 400,000 subscribers built in just a month, there’s no doubt that there is demand for the service at the current price of $9.95 per month. The growth in subscribers is likely to continue while revenue for the company flies.
- Data – HMNY has made it clear that the true value of MoviePass isn’t in the monthly fee the company charges for the service. Instead, the value of the service comes through the data it provides that the company can turn around and sell. At the end of the day, HMNY is a data company, and they know just what to do with the data they amass through MoviePass.
- Cross-Selling Opportunities – Finally, HMNY is getting into the ears of massive amounts of consumers through MoviePass. This gives them a unique cross-selling opportunity, allowing the company to create an ecosystem of products, each of which assist in the sale of the others.
All in all, when you look at what HMNY is doing with MoviePass, it’s hard to discount the opportunity here. Regardless of what NFLX does, we simply can’t discount the potential offered by Helios and Matheson with their newly-acquired MoviePass.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on HMNY. In particular, we’re interested in following the ongoing growth of MoviePass and watching what the company does with the success of the product. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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