Helios and Matheson Analytics Inc (NASDAQ:HMNY) is a stock that has Wall Street buzzing lately, from panic over cash burn and sustainability to redemption in Citadel Securities’ new investment in the tech player this week. Today’s fresh news hot on the press: the company’s majority owned subsidiary movie-ticket subscription platform MoviePass is raring to take over the whole film library and current production slate of Emmett Furla Oasis (EFO) Films. The intent: to launch a new film division, MoviePass Films LLC.
EFO Films has dished up to HMNY the exclusive takeover option for a library that includes legendary films like Broken City to Rambo to Lone Survivor and Academy Award-winning actors including Nicolas Cage, Denzel Washington, and popular Academy Award-nominee Anna Kendrick. Under the terms of the deal, HMNY is set to own 51% of the new company with EFO Films standing to own 49%.
This falls in line with the tech company’s vision of being a Netflix-like gem of the movie theater arena, getting moviegoers watching films in theaters with a cheap monthly subscription service. Now, the company’s ambitions have an added twist: in distributing the movies, HMNY will gain profits from its studio-driven content and new film production along with benefit from stakes in movies. MoviePass had been trailblazing into the arena before this savvy play with purchased distribution rights to films, including The Orchard’s “American Animals” at Sundance. Likewise, the company holds a small seven-figure equity stake in the John Travolta “Gotti” film, Deadline, which was revealed in April- notably one of the EFO slate.
The MoviePass team has indicated to distributors that the service could drive its 3 million subscribers to the opening weekend for the film. Yet, MoviePass has further goals to bring revenue to the table in the bigger picture: for everything from international and streaming distribution to merchandising to music to further ancillary rights.
For a stock that has drained 84% in value year-to-date on back of a nightmare SEC filing confirming only $15.5 million in cash on deck against monthly cash burn of $21.7 million, the EFO Films acquisition is hitting amid a pivotal chapter for HMNY’s MoviePass.
HMNY Chairman and CEO Ted Farnsworth released in a statement, “Ever since we co-acquired our first film with MoviePass Ventures, American Animals, which is set for release this coming June 1, we’ve been looking for an opportunity to acquire and produce content on a larger scale, and prove the power of the MoviePass service in the process,” adding: “We believe we’ve found that opportunity with Emmett Furla Oasis Films. MoviePass Films and MoviePass Ventures, our studio driven production company and our independent film investment division, will both play integral roles in our grand business strategy.”
EFO Films’ founder Randall Emmett for one is applauding the deal, commending MoviePass’ powerhouse talent in driving traffic. Both Emmett as well as George Furla will lead MoviePass Films as Co-CEOs of the new film division.
“To do a deal with Helios and MoviePass is epic for us,” cheered Emmett, noting: “The MoviePass subscription service has totally disrupted the movie industry, for the better. When we worked with MoviePass Ventures on the movie Gotti, starring John Travolta, which premiered at Cannes and is set for release this coming June 15 – I immediately saw how revolutionary the MoviePass™ service is. I have never seen any player in our industry move so quickly and gain such a large following in such a short period of time.” Watch out for box office attendance to shoot up: “What impresses me the most is that MoviePass can guarantee box office attendance, which is a game changer. I don’t believe anybody else can do that.”
MoviePass CEO Mitch Lowe will also be on the Board, working alongside Farnsworth for strategy execution between MoviePass and new company MoviePass Films. MoviePass stands to get paid by MoviePass Films for all marketing services offered to market MoviePass Films productions. The new film division is primed to owned and control every revenue stream on back of theatrical release, domestic coupled with foreign distribution rights, streaming, retail, DVD sales transactional sales, etc.
“To have such a well-known, quality production company join forces with the Helios/MoviePass group of companies is truly remarkable,” expressed Lowe, continuing: “Since we began disrupting the movie industry with our unprecedented low-cost movie theater subscription service, MoviePass™, we have envisioned owning and developing our own studio content and using the power of our several million subscribers to bolster the success of the box office for our films. I believe MoviePass Films will accelerate those efforts and demonstrate the power of MoviePass to drive movie theater attendance and downstream sales, for the benefit of moviegoers, movie theaters, studios and the film entertainment ecosystem as a whole.”
HMNY anticipates that thanks to this strategic takeover of EFO Films’ current production slate combined with Hollywood veterans steering the success of MoviePass Films, the company’s ambitions to produce its own movies for theatergoers to view upon theatrical release can get fired up. The deal is hoped to translate to fresh revenue prospects for MoviePass’ marketing services while driving up box office attendance in the U.S., proving to be an advantage for exhibitors of MoviePass Films.
Ultimately, “We believe the track record of Randall Emmett and George Furla over the last twenty years speaks for itself. For MoviePass to have the opportunity to jump in the middle of new high-caliber productions that are already underway, becoming a part of that, is more exciting for Helios and MoviePass than I ever could have imagined,” surmised Farnsworth.
TipRanks suggests the bulls win out when it comes to popular Street-wide opinion on the tech stock. All 3 bulls polled in the last 3 months rate a Buy on HMNY stock. Notably, the 12-month average price target stands at $13.33, marking 3000% in upside potential from where the stock is currently trading.