Helios and Matheson Analytics (NASDAQ:HMNY) has officially finalized its purchase of Moviefone assets from Verizon subsidiary Oath. All it cost Helios was $1 million in cash, roughly 2.6 million shares of common stock, along with warrants valued at around 2.6 million added shares with an exercise price of $5.50. Taking yesterday’s closing price under account, the M&A alliance is worth around $8.6 million. Meanwhile, Oath’s holding will be subject to a lock-up period of one-year.
This is acquisition highlights a key step for HMNY’s major-owned subsidiary MoviePass, a prospective future Netflix of the movie theater market. For context, Moviefone makes editorial movie content, theater showtimes as well as ticket purchasing accessible to its visitors.
Canaccord analyst Austin Moldow cheers, “We believe this deal gives MoviePass the opportunity to convert a large number of users into subscribers and provides a platform for enhanced studio marketing and user engagement.”
In reaction, the analyst reiterates a Buy rating on HMNY stock with a $15 price target, which implies a whopping almost 414% upside from current levels. (To watch Moldow’s track record, click here)
Consider that in an arena of movie entertainment sites, from editorial to ticketing to theater content, HMNY’s newest acquisition of Moviefone has the most monthly unique visitors- and has a 4th biggest lead in its sub-category, writes Moldow.
The analyst continues, “Moviefone is also the largest independent brand, with the only bigger properties being Fandango (majority owned by Comcast) and MSN Movies (owned by Microsoft). Moviefone traffic metrics have historically been solid, with 7.2M monthly UVs in 2016, up ~20% y/y.”
Last year, however, Moldow underscores that the initial month following the heels of Yahoo’s acquisition by Verizon and Oath was set into motion, Moviefone experienced its first year-over-year traffic stumble.
That said, “The property has since fallen to ~3M UVs in February, but we believe the brand will get the attention and focus from MoviePass that will reinvigorate the brand and grow the audience back to, if not above, prior levels,” highlights Moldow, who argues for the bulls: “We believe MoviePass will leverage the Moviefone brand and audience for subscriber conversion. Currently we estimate the overlap of Moviefone users and MoviePass subs is fairly minimal (<10%).”
For an acquisition that should boost ad inventory sales numbers for MoviePass, Moldow sings the braises of a deal that has sealed a window of opportunity for the tech player.