MoviePass Projected To Burn $600M In 2018

Long-time readers should note some significant changes in how I communicate in the public domain. The primary purpose of this forum is now to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

Accordingly, this document should not be construed as an endorsement or recommendation of the companies or securities discussed herein. I am not an investment advisor and this is not an investment thesis. It is merely one part of the story, which I present for debate in hopes of determining all risks and upside potential. The disclosure at the end of this piece is critical to understanding the content of this document. Further, I frequently trade my positions and may buy, sell, or short the securities mentioned herein at any time, regardless of the facts or perceived implications of this article.


Canaccord’s Austin Moldow released an HMNY update yesterday. In typical Moldow fashion, he contradicted himself on several fronts. For example, he stated that MoviePass management has decided not to grow faster to avoid the need for raising more capital. However, he reiterated his forecast for 12M subs by 2022.
He also said that they have a self-funding financial model (UPDATE — YES, BUT IT ALSO BURNS A LOT MORE MONEY THAN IT FUNDS ITSELF WITH… IT’S FUNDING ITSELF; JUST NOT WITH ANYWHERE NEAR ENOUGH MONEY… NICE TRICK OF THE TONGUE). However, he also believes that the 12M sub level (in 2022) is where MoviePass “should evolve to yield considerable bargaining power”.
Mr. Moldow, 2022 is 4 years from now. MoviePass can’t self-fund until then. They need to yield considerable bargaining power before then!
Of course, Canaccord will earn millions every time MoviePass raises another big round.
In the meantime, he readily admits that MoviePass is still buying about 6% of all movie tickets in the U.S.
That’s interesting because they only claim to have purchased around 1 million tickets for Black Panther. That’s “just” 1.5% of the U.S. ticket sales (vs. the 6% mentioned above). 1.5% actually makes sense because MoviePass has signed about 1% of U.S. moviegoers.
However, the Top 27 MoviePass movies was publicly revealed last night. Add them all up and you get somewhere around 10 million tickets purchased. Last year’s top 27 movies represented 60% of the industry-wide total. If we apply that to MoviePass’ top 27, it would imply that they’ve purchased about 17 million tickets to date.
That’s very close to the 18 million estimate in my model. So, it appears that Mr. Lowe is telling us the truth about one thing — MoviePass’ high utilization rate. However, that’s not good news for their cash burn. It appears that frequent moviegoers are indeed dominant in their customer base, as I have been warning for months.
Moldow also admits that MoviePass is only earning discounts on about 6% of the tickets it purchases. Running the math on that, MoviePass is only getting back an average of about $0.13 on each ticket they buy.
Yes, 13-cents… out of 11 dollars.
I’d like to say that they’re going to make big headway here, but they are only “optimistic about bringing on mid-tier partners”. Optimistic means it isn’t happening yet…
…and that’s just in the mid-tier. In other words, they’re only signing the little guys.
Clearly, they’ve got a lot more work to do.
It’s not all bad though. According to Canaccord, studio marketing revenue is now close to 50-cents per sub per month. I find that hard to believe, but I have to. So, I’ve updated the model to reflect that $1 million per month.
Canaccord also stated that only 20% the base is currently on an annual plan. That means that roughly 80% are paying monthly (assuming there aren’t many on the multi-month plans that were offered late last year). UPDATE: In addition, about half of new signups are for the $9.95 monthly plan, with the other half signing up for their annual subscription offering.
This has been all reflected in my updated cash burn model.
You can see it here: Mark’s MoviePass Model
As compared to my last model, the Feb-Dec cash burn is now $37 million lower. That sounds big until you realize that my cash burn estimate for 2018 is still $609 million, over half a billion dollars more than they have at their disposal.
At the Roth Investor Conference, investors heard Mr. Farnsworth say something along the lines of, “I probably shouldn’t say this, but we won’t need to raise any more money.”
I agree..
he probably shouldn’t have said that.
Running all of the numbers that management has given us, I (still) don’t see how they can possibly close that $600M gap based on their current progress (signing revenue-generating deals, stemming the utilization issue, etc). Everything they have said suggests that they’re currently pulling in about $30 million per month from subscriptions and $2 million per month from discounts and other ancillary revenue.
That’s $32 million in monthly revenue. It sounds like a lot, but my model says that they’ve been SPENDING over $50 million per month on movie tickets, marketing, R&D, etc…
…and I expect that expense number to spike by 60% and average $80 million per month during the April/May/June/July gauntlet.
By my reckoning, they don’t even have one of those months in their bank account.
Of course, I’ve already heard every bull’s argument. In fact, I agree that their success in getting people to attend specific movies could be a good thing… but only if they can influence the movies we go to see, as opposed to stimulating us to see more movies.
According to my research, that’s not the case.
For the most part, people are going to see the movies they would normally see no matter what… and then, they’ll see additional movies they’re enticed to see.
For example, my better-half and I saw Game Night last night, a movie we normally wouldn’t see in the theater (but glad we did – it was great / very funny). So, that’s $23 out of MoviePass’ bank account… and it won’t stop us from going to see Avengers, Solo: A Star Wars Story, Deadpool 2, The Incredibles 2, or Jurassic World.
Those will all come out in April / June… and there’s no way that Disney, Fox, etc. are going to give up a piece of the action. They don’t need anyone’s help to fill seats. Just advertising.

The average moviegoer attends 0.5 movies per month. The average MoviePass customer has been attending closer to 2 movies per month. Those extra 1.5 movies per month requires MoviePass to spend about $30 million (again, per month).

Meanwhile, they are only pulling in $2 million from ticket discounts and advertising. In other words, the more movies people attend, the more they lose… and the only way to fix that is to increase their per-movie discount/marketing/other revenues by 1,400%. Until last week, Mitch Lowe was talking about “the data” and how they were going to use it to create a “night at the movies” to closet that 1,400% gap.
Of course, we now know how that turned out. So much for that.

That’s why I’ve been trying to focus the bulls on the utilization rate. For months, the staunchest bulls told me that the numbers didn’t matter. Well, the leader of the bulls finally capitulated last week (but stopped short of acknowledging that the number do matter).
I’ve also been saying that utilization wasn’t dropping fast enough, which indicated to me that MoviePass’ customer base was dominated by frequent moviegoers. Well, Canaccord finally admitted yesterday that monthly frequency “is declining (albeit slowly)”.
That’s exactly what I’ve been saying (and fearing) since the stock was $12 in the November time frame.
“Albeit slowly” is not good enough. It should be much slower already! At least that’s what Mr. Farnsworth promised back in September. Sigh.
Things aren’t about get any better either. In fact, it’s about to get a lot worse. As bad as things have been over the past three months, they’ve had the benefit of operating within the the slow period for movie going — between the holidays and the summer blockbuster season.
Ominously, the summer gauntlet starts early this year. Ready Player One kicks it off next week and is expected to do $260 million domestically.
A few weeks after that, things go off the rails.
Avengers: Infinity War (the most anticipated superhero movie ever) comes out on April 27. Black Panther kept seats full for a month. Avengers should be much bigger, but won’t have to be, because Deadpool 2 comes out on May 18. Then, Solo (which looks fantastic) comes out on May 25. Incredibles 2 will be released on June 15, and then Jurassic World launches just a week after that… and we have potential sleepers — like Ocean’s 8 and Dwayne “The Rock” Johnson’s Rampage — sprinkled in between.
Of course, these releases will produce some ad revenue for MoviePass. However, as I’ve discussed, they’re only pulling in $2 million in ancillary revenue per month. In contrast, IMDB forecasts that the two-month blockbuster gauntlet will generate $2.5 billion in domestic receipts.
Compare that to Black Panther, which killed it, but still “only” did $500 million in February.
Looking at my new model, it still appears that they’ll need two large rounds of funding before mid-July. Management is denying the need for even one round, but that math just doesn’t add up unless they have a secret weapon they’re not telling anyone about…
…and as we all know, they’ve made a habit of telling everyone everything (including a bunch of things that don’t even exist).
The Bottom Line: When I first wrote this article (12 hours ago) I originally said, “Despite my continued pessimism, this represents the second straight improvement in my outlook. It’s not enough to make me bullish (or even neutral), but it’s a solid step in the right direction.”
Unfortunately, with this morning’s news and data points, I had to spend half the morning redoing my model and this article… all for the worse.
Stay tuned.
p.s. I think one of my prior posts hypothesized that Canaccord’s Austin Moldow was a corporate “fall guy”. Basically, someone to take responsibility for covering a stock that none of the managing directors want to have on their record.
Well, a TipRanks look-up told a striking story:
HMNY Canaccord
That’s right… none of his picks have gone up and his average return is negative 42%.
Of course, I’m one to talk, because TipRanks has given me a bad rating as well. However, those who have followed my picks can see that TipRanks counts my short-term calls as long-term calls, includes my hedges as picks, and somehow omitted HMNY’s run from 3 to 38 (and its decline from 12 to 3). Oh well. LOL.
That’s why TipRanks is best used to track sell-side analysts. There’s little ambiguity in sell-side initiations / ratings. Unfortunately, Mr. Moldow’s record is unambiguously the worst I’ve seen since Richard Pearson (who seems to make a habit of smearing companies and others as a possible smoke screen for what might be a stock manipulation scheme).
Either way, that’s not a good person to be compared against.
Just to reiterate, I’m generally a fan of Canaccord’s work (particularly that of Richard Davis). I have nothing negative to say about Mr. Moldow’s integrity. He’s just not an analyst you want to put your money behind.
Let the buyer beware.

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Disclosures / Disclaimers: I have no position in HMNY, nor have I traded the stock since launching this blog. Further, I am not aware of anyone who has been short HMNY or its derivatives since launching this blog. This is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article.

I am not a financial advisor. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this article.

I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter.  Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.

I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article. The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

The primary purpose of this blog/forum is to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.


50 thoughts on “MoviePass Projected To Burn $600M In 2018

    1. Regal was recently purchased by Cineworld, who has their own subscription service overseas. Regal would introduce their own subscription service before partnering with Moviepass.

      No need to partner when they can just take the free money for now. There is no critical mass yet.

      Liked by 1 person

    1. Merger with whom? Their financial structure is a complete mess. I can’t imagine a company that would want to combine themselves with something like that. 🤷🏻‍♂️


  1. Has anyone delved into the earnings possibilities of purchasing distribution rights of American Animals for $3 million?

    The release date is June 1st. Not sure what distribution plans are, or projected earnings, but it might help the bottom line if they successfully market the heck out of it.


    1. That will sell a lot of tickets, spiking MoviePass’ expense load, with only a fraction of that money coming back to them.

      As I’ve said many times before, this model will not work unless they can curtail moviegoers from going to all of the blockbusters and INSTEAD go to more movies where they get a kickback.

      Alternatively, the utilization rate has to come down… And the evidence is clear that it will not until they get a high proportion of non-frequent moviegoers. In the meantime, they have to work through the 33 million frequent moviegoers that haven’t even signed up yet.


  2. I don’t think this move has anything to do with trust and I still think they are trying to slow things down by promoting only an annual plan. I agree with you the demand was likely slowing down and all available evidence would support that. I think at the $115 price point they were likely seeing 2 things:

    1. Casual users prefer a monthly plan. Not enough of the more casual users were signing up due to the upfront cost and/or too many were still signing up for the monthly option via the app.
    2. Same thing with the cheaper ticket price markets they are targeting. Not enough picking annual and/or not enough signing up as a mix of the whole.

    We all know the overall sub growth slowed way down once they went to the annual only promotion. So if I am right about my 2 points above, those were the people they were not converting to customers. If that is true, that means the people they were converting were more frequent users in more expensive markets.

    So, they could go back to a monthly plan, but they need the upfront cash like Canaccord said. So this move is likely trying to address these things with a lower price point, but still an annual plan to get the cash up front. If you get more casual users and more cheap ticket users, you could in whole or in part offset the lower price because of changing that mix of new subscribers.

    That is my take on this.


    1. That’s an excellent take.

      My issue is that the lower upfront cash now disappears in 4 months, according to my utilization analysis. Then, they need to support those customers for 8 more months.


      1. That’s why it needs to increase the mix of cheaper tickets and more casual users to offset. We will have to see if that is what happens.


      2. So you think the less frequent users are the ones signing up at a higher price? Sorry, but I disagree. It is the more frequent users still signing up. And you are right, they will still sign up at a lower price, but the increase in new customers is now going to be a higher percent of the less frequent and less expensive users of course. Looks to me like they are still trying to dial in the right price to get the right mix while keeping the annual plan as the only option they promote to serve their funding needs.


        1. No. Not at all. That would be dumb. LOL.
          I just think the frequent users are dominating the signups… and lowering the price is just giving the entire base of frequent-dominant users a cheaper ride.
          As for finding the right price, they told us that they had already done that research (based on all their data) back in September. Though bearish, I still trusted them until the last month or so. Now I don’t. Too many inconsistencies.
          I think We are on a similar wavelength, but I’m just a bit more skeptical; you’re a bit more “let’s see”. Nothing wrong with either, IMHO.


      3. Maybe, but I do not think the $115 price keeps frequent users from signing up. They will sign up at $115 or at $90. It’s the less frequent that will supply the increase of signups (assuming there is one) at the $90 price point. Since there was a huge decrease when they changed to the $115 annual, they probably already know what type of new subscriber they were not converting on that annual plan.


        1. Agree… but if the ratio is 50/50 or less (in favor of the frequent) then they’re only hurting themselves. Of course, I understand the argument that they don’t really have much choice. It’s either going to work or it’s a catch 22. I guess we’ll find out which soon enough.

          Either way, enjoying your key minded repartee.


          1. Well we know the 115 was not giving them what they wanted or there would be no reason to lower it.


          1. I have always gotten emails from all posts since I signed up. I never get notifications on my phone that a new post has been made, except if someone replies to one of my comments or likes my comments.

            Liked by 1 person

  3. As I highlighted on a different one of Mark’s threads, a good portion of the subscriber slowdown at MoviePass was & is self induced. Everyone forgets the company cancelled Costco near the end of February and also the ability to gift a subscription. The main reason I believe they cancelled those two offerings was due to the fact that those were the ones MoviePass was less prepared to process and caused the bulk of their customer confusion/complaints. So in the interim, while they work out those operational kinks, the only other way to make up some of the slack is to drop the price & draw in other subscribers. So yes, they are “slowing down” their subscriptions by removing Costco & gifting but they will probably bring them back in a few months on the back of TaskUs customer support getting up to speed. Finally, staggering some of the new members is probably strategic too to avoid bulking up all at once during the peak April/May/June movie releases.

    Liked by 1 person

    1. Great post. That would make sense. It would also make sense if they were more honest about it (not calling it “slowing down”). At this point, the stock might have a better chance of acting positively if they were honest about their progress (+) and growing pains (-).

      I can totally understand slowing things down for the summer gauntlet, but lowering prices is not consistent with that notion.

      Either way, your explanation is well thought out and makes complete sense. Thanks for the viewpoint!


  4. Remember Costco stands behind their members more than any other retailer I’ve seen. They’ve had to spend on specialized Costco/MP helpdesk, and issued refunds when MP did not. I think MP has burned that relationship and possible other retailers are in the loop on what happened. The entire state of affairs makes it harder to co-brand and bundle with other products.

    Liked by 1 person

    1. This makes no sense because originally the Costco deal was scheduled to end early January. So if they burned the relationship, it would have ceased much earlier. Instead, the promotion was extended up until ending of February. I was actually shocked they let it continue for that long! Anyway, it is very unlikely their relationship with Costco was damaged.


      1. ryan,

        Why did Costco set up a Zendesk, with it’s own 800 number to support Costco / MoviePass customers with problems? That happened. I read the 100’s of Costco members horrible reviews on before Costco “ended”. It wasn’t pretty. The membership growth numbers for Dec-Jan-Feb were very high, I’m sure that was due to Costco, and now it’s gone.

        BTW The Fandor ceo claimed 300k added during MP/Fandor/Costco promotion.

        Liked by 1 person

  5. Hey Mark, your model is great but it is based on what we know now and as a result its basically the bear thesis (as it fails to consider any upside potential development). Would be great if you could do another model which accounts for deals with at least one (if not all) of the big 3-4 chains ($2) not to mention Internationally. I think the real upside in this stock is if they can survive and expand globally ( although pure speculation, i believe thats why they hired Maria Stipp). Its these other potential future revenues (ala Uber and restaurant deals/advertising) that makes the bull case which your model completely ignores, which is why i’m sure some analysts have gotten burned shorting NFLX and TSLA the last 3 years (excuse me for putting HMNY in the same league, just using it as an example. Growth stocks cannot be valued traditionally. Because if these things which they seem to plan on doing succeed, your model of the future is completely invalid. It is basically a doomsday scenario (which may come to fruition), but can also be blown completely out of the water if the current fundamentals change.


    1. I think the problem with the bulls have with the stock is that they think it has the funding cachet of the big guys. It’s important to understand those exact words.

      The mega companies have had a lot of shorts and bears, but they’ve also had some major institutional backing, which has allowed them to obtain billions of funding at attractive valuations.


      In fact, it has the opposite. Every time they do a round of funding the stock goes lower and lower. Unfortunately, their business model will require the company to do several more rounds of funding before they can reach critical mass. Therefore, my thesis is NOT that they will fail… My thesis is that there will be nothing in it for common shareholders, because they are the ones bearing the brunt of the company’s funding efforts (as opposed to institutional support at high valuations).

      As a result, modeling for major future events is fruitless, because of the level of dilution necessary to make one of those major events happen. And this is without making the argument that they will fail to make one of those major events happen. So far, they have proven themselves in capable of hitting near term targets. So long-term targets are even further away and less likely to occur.

      The other problem with the bulls have is that they think I am a bear. I AM NOT. For some reason, they forget that I was one of the very first bulls on this stock… but like any professional, my job is to assess the situation as it unfolds… and the business model has failed against their originally stated goals, almost from the start.

      This has forced them to shift their strategy to something which, financially, is solely dependent on diluting common shareholders and hoping that institutional shareholders continue to participate in new funding rounds as the stock churns lower from the dilution.

      Neither of them have experience with this… but I do, and it never turns out well.

      I would apologize for my view, except for the fact that my view is 100% based on my experience as an analyst who has dealt with unicorns since 1994.

      I can’t make anyone believe in my analysis, but I can tell you that almost every professional who hasn’t counted my analysis agrees with it. If retail investors choose to go against that, that is their choice and I respect it.

      I REALLY hope that the data will turn in their favor. If and when it does, you can bet that I will be the first one to report it, broadly and loudly.


      Liked by 1 person

    2. p.s. if you are an institutional investor and disagree with my analysis, I would be interested in setting up a call with you.

      If so, shoot me an email with your institution’s name for validation purposes and we’ll set up a call.

      Otherwise, please understand and considering the professional fact that growth stocks get valued differently ONLY IF their business model makes sense. This one seemed to make sense initially, but doesn’t anymore. Therefore, growth stock valuation is not appropriate.

      To be clear, less than 10% of aspiring growth companies do. It’s VERY uncommon, contrary to what the bulls would like to believe.

      Remember, these principles enabled me to ride it up… and warn people to get out before this 90% decline. It wasn’t intuition. It was the tried and true methods of professional/institutional investing.

      Liked by 1 person

      1. Hey Mark, I think your work has been spot on and great thus far, and greatly appreciated. Your thesis has also been proven correct and reflected in the share price. You’ve done a great job covering their cash burn and dilution and showing its effect (more of the same will surely continue this downward spiral). I guess My point is past performance is not indicative of future results. You yourself have said the stock is currently oversold technically (and it may have further to go). I am simply of the opinion that this is a startup, with growing revenue soon to be 300mill plus and growing and there is a lot of potential upside based on added future revenue around their growing subscriber base. It is this upside which makes Movie Pass an interesting proposition. All your points are valid but the gold is unlocking future revenues and value from the subscriber base (which i do not think is priced in currently by your model or the market but may well be coming soon to a theatre near you at which point everything changes). It might be forward thinking in mapping out a scenario where this company does succeed (which is also possible) before it becomes obvious to the market. What i am saying is the bear case is in and there for all to see, why not think about and map out the bull case before it happens (which of course it may not).

        p.s. I am not an Institutional investor, nor retail but have been successful in the trading/investment industry for 5 years or so. I too have seen small cap speculative stocks get diluted into the ground. However few of them had $300mill in revenue and growing. The issue is whether HMNY can get out of this death spiral before it is too late, i think this is still a possibility and the Risk/Reward is getting to a point where this stock is again becoming attractive.


        1. Good post. I get what you’re saying, but check out some of my other posts. I did one where I showed what happens under the bullish scenario of extra revenue sources.

          If you want the short version, Management’s original business model assumed a utilization rate of 1 movie per month. It also assumed revenue from a percentage of theaters and especially studios which cannot happen because the studio business models won’t allow it and advertising rates (and market share) don’t produce as much as they led us to believe. Then, of course, the data “lie” eliminated some of the revenue sources they’ve been promising people.

          Again, if the utilization and ancillary revenue numbers start to show progress, I’ll be the first to say things are changing. However, if you’ve carefully tracked management’s promises, they’ve failed to achieve any of them, except for subscriber count (which has been done via price cuts and detrimental levels of cash burn).

          “Detrimental” is the key word there. I like cash burn WDAY, GAIA, etc.). But there’s a math and science behind it, which seems to elude these guys 😂 They’re simply not doing it right. They’re playing the game, but didn’t read the instructions / rules first. This is how we separate winners from losers (because many, like this one, have great stories… so you have to have a process for knowing which are fairy tales).

          Liked by 1 person

    3. Denis,
      Maria Stipp is a DIRECTOR ON THE BOARD OF MOVIEPASS not an employee. She worked with Mitch back at Outerwall. Outside of knowing Mitch I don’t see much to be excited about. Mitch hires a lot of ex-Outerwall people, including a woman who has mis-managed MoviePass customer service.

      Liked by 2 people

      1. Hey John thanks for clarifying .I was aware and should have said appointed as opposed to hired to be clear (Potato Potata). I think she had experience with Selling half of Lagunitas to Heinekken, hence me putting 2 and 2 together based on what Mitch has talked about previously in terms of expansion into other markets such as Australia and Europe and potential deals/joint ventures.

        Liked by 1 person

  6. The bulls should consider that my 2018 model incorporates 3rd party revenue. So, the cash burn is beyond that. I think investors should think about how the company gets out of 2018 with the funding they need before looking forward to the success they might eventually see in 2019 and beyond.

    That sort of thinking would have saved them a lot of losses to this point (and I suspect, more losses before they reach an inflection point). Just trying to help.


    1. This is a nice base from which to work. A couple of notable things to adjust:

      1) Can’t assume 2M subs for the entire 5 months.

      2) “More than 200,000” doesn’t = 200,000. It equals between 200,000 and 299,999 (and therefore most likely 250,000 on average).


    1. Yep. That’s nice, but once again, if it encourages additional usage (as opposed to replacement usage), it only exacerbates their cash burn issue. $2 – $10 = -$8


  7. I think that’s a bit aggressive to say it encourages additional usage as not everyone has unlimited time on their hands or wants to see a movie everyday. Not to mention as MP’s subscriber base grows, they acquire more & more casual users vs. heavy users. Also, MP is becoming much more focused on “managing inventory” by blocking certain film/theaters/showtimes while making others (like studio subsidized ones) more readily available…


    1. I’m not saying that it encourages additional usage. However, if it does, it creates an exacerbation of the cash burn issue.

      The funny thing is, Management says it does. They are OK with that as long as they came and hit the critical mass necessary to get money from enough third parties. The problem is, they will need about 10 million subscribers to be considered “powerful”. At the current pace of cash burn, they’ll run out of financial backing before that happens (based on the results of the past two funding rounds).


  8. Ted Farnsworth seems like an albatross around this company. Good for promises that don’t come true and awarding himself bonuses and shares. Do u have an opinion on whether it would help the company if he left? Thanks. Enjoy your analysis


    1. I think Ted is a GREAT asset to the company from a marketing perspective. Ordinarily, I would say that his departure from the company would be a major negative. However now that you mention the compensation aspect, I find it difficult to decide if the compensation benefit to the company would offset the loss of his PR brilliance. Tough call.


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