October 11, 2017 / 1:47 PM / 6 days ago

Helios and Matheson reaps benefits of MoviePass frenzy

Oct 11 (Reuters) - If the past two months’ share moves are anything to go by, Helios and Matheson Analytics Inc seems to have gained control of a Netflix-like business that has the potential to become a billion dollar company.

With another 18 percent jump on Wednesday, the IT firm’s shares have jumped more than 1000 percent since Aug. 15, when it bought a majority stake in online ticketing service, MoviePass, for $27 million.

The ticketing service, led by Netflix co-founder Mitch Lowe, is seeking to spur the sort of revolution for the movie business that Ryanair did for airlines or Netflix did for streaming.

The alliance between the two firms dates exactly to the moment earlier this year when MoviePass slashed all its variable subscription fees in favour of a single $9.95 model, allowing unlimited access to more than 90 percent of U.S. theatres.

In the month that followed, the company's subscriber numbers rose to over 400,000 from less than 20,000. (bit.ly/2xzy0wG)

Maxim Group analyst Brian Kinstlinger says that means the company’s estimate of another 2.5 million subscribers over the next twelve months may be conservative.

“With the undeniable value proposition for moviegoers, and as more than 37 million people see at least one movie per month, we believe that estimate could prove conservative,” Kinstlinger wrote in a research note dated Oct. 2.

He started coverage of Helios with a “buy” rating.

The catch is that while its customers will be paying a flat monthly rate, MoviePass will pay the full price of movie tickets to theaters. That means it will post considerable losses over the next two years, and hope to make money from an eventual large user base, Kinstlinger said.

MoviePass plans to go public by March 31, 2018. (Reporting by Supantha Mukherjee and Arjun Panchadar in Bengaluru; editing by Patrick Graham)

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