July 2, 2018
NEWS ANALYSIS — With its shares worth pennies, Helios and Matheson Analytics, corporate parent of ticket subscription service MoviePass, has launched a salvo of fiscal Hail Marys.
The company July 2 announced a “mixed shelf” securities filing with the Securities and Exchange Commission, which would allow it to sell $1.2 billion worth of securities over the next three years in various amounts and pricing.
The move follows a June 28 filing in which HMNY quietly agreed to exchange 22.6 million actual shares of HMNY with holders of more than 26 million warrants (to buy stock).
The latter sent the stock up nearly 35% to an (still) anemic 31 cents per share, a momentary swing that dropped to 27 cents in pre-market activity the morning of July 2.
Regardless, the action was a win for the holders of HMNY warrants, which were reportedly actionable only when the stock price topped $5.50 per share.
HMNY, which owns 92% of MoviePass, is attempting to right a loss-leader business model that enables MoviePass subscribers access to one theatrical screening daily for a $9.95 monthly fee.
While a boon to consumers, MoviePass (with more than 3 million subs) is a fiscal nightmare to HMNY’s liquidity: reportedly costing $40 million alone in May ticket purchases by subscribers.
The service from Jan. 1, 2017, through Dec. 10, 2017, lost more than $31 million, spending $46 million on tickets while generating less than $15 million in subscription revenue.
Simply put: MoviePass is hemorrhaging millions of dollars more than it takes in.
Not a position it wants to be in during a burgeoning domestic box office that saw revenue surpass a record $3 billion in the second quarter, according to AMC Theatres, which launched its own ticket subscription service in June.
Later this month, HMNY is expected to authorize a reverse stock split aimed at raising the share price well above the Nasdaq-mandated $1-per-share minimum. Indeed, the reverse split — which must be approved by shareholders — is a pre-requisite to the aforementioned securities offerings.