MoviePass Parent Falls to Lowest-Ever Stock Value

NEWS ANALYSIS – Helios and Matheson Analytics (HMNY), 92% owners of theatrical ticket subscription service MoviePass, saw shares plummet 26% at the market close to a record low 11 cents per share.

In a day that saw more than 82 million shares trade hands – nearly four-times the daily average – HMNY continues to be dogged by MoviePass’ loss-leader business model that is a boon to subscribers – but not the bottom line.

The company has been burning through more than $20 million monthly paying exhibitors face-value for every ticket used by subscribers. MoviePass, with more than 3 million subscribers, remains a gift to everyone – except itself.

Last week, HMNY CEO Ted Farnsworth played the crying game, telling the media AMC Theatres and others were making a concerted effort to put MoviePass out of business through scare tactics.

“Of course, we’re burning cash, but so does Amazon,” Farnsworth told The Street. “And then there’s Netflix, doing original content and losing $4 billion this year.”

Actually, Farnsworth would love to have Netflix’s “losses.” The service is a money tree, generating $674 million in profit on revenue of more than $7.6 billion. What the HMNY CEO was probably alluding to is Netflix’s projected $3 billion-to-$4 billion negative free cash flow. Netflix expects to end the year with more than $8 billion in debt.

 

MoviePass Parent Selling More Shares, Stock Price Declines in Response

As expected, Helios and Matheson Analytics, the fiscally-challenged owner of MoviePass, July 10 announced an intent to sell shares of common stock, in addition to warrants to purchase shares of common stock.

HMNY didn’t say when the stock sale would be completed, but said any net proceeds from the offering would be used for general corporate purposes and its subsidiaries (i.e. MoviePass and related businesses).

The market responded by dropping HMNY’s stock value more than 9% (below 19 cents-per-share) in after-market trading.

The company’s stock has fallen more than 97% in the past 12 months as investors grow wary of MoviePass’ cash-deficit business model offering subscribers daily access to theatrical screenings for $9.95 monthly fee.

Earlier this month, HMNY issued a regulatory filing about the intent to raise $1.2 billion over the next three years. The company has proposed a reverse stock split to be voted upon July 23 at the shareholder meeting.

MoviePass Had a Bad Friday Night; Monday Morning Could Be Worse

NEWS ANALYSIS — MoviePass has promised to reimburse subscribers who had to pay out-of-pocket to buy tickets Friday night (July 6) after a technical issue with the service’s app prevented users from checking in to their film.

MoviePass sent out a tweet advising users to update their app while also thanking its more than 3 million members for their understanding.

“Starting tomorrow [July 7], please send us chat through the MoviePass app showing the full receipt, including the movie title, showtime, and theater for a reimbursement. Thank you again for your understanding,” wrote the service.

That could be the least of the subscription ticket service’s problems. Parent Helios and Matheson Analytics saw its stock close down the same day to a record low 18.4 cents per share as it desperately tries to secure additional funding for a $9.95 monthly business model that is hemorrhaging millions of dollars.

The previous day MoviePass began implementing “surge pricing” at select screening times in an effort to mitigate costs associated with new releases such as Marvel Studios’ Ant-Man and the Wasp, which teams Paul Rudd with Evangeline Lilly  and gave the studio another No. 1 opening weekend.

Ant-Man and the Wasp proves that at this point Marvel can seemingly do no wrong,” Paul Dergarabedian, senior media analyst at comScore, said in a statement.

But can MoviePass do right with Wall Street via surge pricing? It’s working so far for Uber, which charges users a premium (upwards 2.5 times the standard fare) when attempting to get a ride during rush hour, on holidays or in sketchy weather conditions.

Then again, Uber isn’t paying off the taxi industry to conduct its business model.

Some observers wonder why MoviePass doesn’t just raise its monthly price to match what AMC Theatres is charging ($19.95) for its upstart subscription service.

“By keeping the unlimited price as our base offering, you still get the best deal possible,” MoviePass writes in its FAQ section. “AMC’s higher price means you pay more for way fewer options. Our model, though, lets you continue to see movies in a way that works best for you.”

MoviePass Parent Wants Major Reverse Stock Split, Among Other Proposals at July 23 Shareholder Meeting

Helios and Matheson Analytics, parent of fiscally-challenged ticket subscription service MoviePass, is looking for shareholder redemption July 23.

That’s the date stockholders will vote on a series of proposals, including one that would authorize the board of directors to issue a reverse stock split as high as one share for every 250 shares of common stock.

With the stock down 3.6% to 21 cents in early July 5 morning trading, it would take combining five HMNY shares just to top Nasdaq’s mandatory $1-per-share minimum.

“If the board determines to implement the ‘reverse split amendment,’ [HMNY] would communicate to the public, prior to the effective time of the amendment, additional details regarding final reverse split ratio, as determined by the board,” HMNY said in the July 5 filing.

Indeed, HMNY needs to quickly shore up its fiscal optics. MoviePass is hemorrhaging millions of dollars more each month than it is generating enabling subscribers daily access to theatrical screening for $9.95 fee.

Another proposal would increase authorization of common shares from 500 million to 5 billion. HMNY currently has 498 million shares of stock authorized, including about 250 million shares of common stock outstanding.

HMNY said a nay vote by shareholders on the proposal could “unnecessarily” limit or delay its ability to pursue future financings, acquisitions and other transactions.

The company is also seeking approval of a “January Note Financing Proposal,” which would give it access to $35 million remaining from an original $60 million bond deal.

HMNY earlier this month announced a “mixed shelf” securities filing, which would allow it to sell $1.2 billion worth of securities over the next three years in various amounts and pricing.

 

Mitch Lowe: MoviePass (Still) Plans to Break Even by Yearend

Fiscally-challenged theatrical ticket subscription service MoviePass will apparently stop losing money by the end of the year, according to CEO Mitch Lowe.

The former executive at Netflix and Redbox June 27 took to social media (in a Q&A on Reddit.com) to address ongoing concerns about the platform’s financial viability after parent Helios and Matheson Analytics admitted the service is hemorrhaging millions of dollars more monthly than it takes in.

HMNY’s stock closed down at 21 cents per share June 27.

“It takes a lot of investment and significant losses in order to build a multibillion dollar entertainment company,” wrote Lowe. “Look at Spotify, Netflix and Amazon — there are many different companies that lost money for years and are only now turning a profit.”

Lowe said MoviePass would like to break even on subscription revenue, while generating income from advertising, brand partnerships and content licensing.

“The reason we keep our price low is to attract the occasional moviegoer,” Lowe wrote, while avoiding HMNY’s share price and fiscal health. “There are more than 200 million occasional moviegoers in the U.S., who only go to the movies four to five times a year without MoviePass and nine to 10 times a year when they join MoviePass. If we get enough occasional moviegoers to offset the frequent moviegoer, everything will balance out.”

Respondents peppered Lowe with assorted questions, complaints and personal commentary regarding what some characterized as “annoying afterthoughts,” recently imposed by MoviePass, including requiring subscribers to scan ticket stubs to prove they’re not seeing the same movie twice and limiting ticket purchases to same-day viewing.

“Having to buy [a ticket] day-of is a huge issue in areas with assigned seats,” wrote one subscriber. “This is what tipped me over to signing up with [rival subscription service] AMC [Stub A-List].”

Lowe responded, saying MoviePass invested millions building a patented platform that gives subs access to 91% of the theaters across the country – unlike AMC’s subscription service.

In February, MoviePass sued upstart competitor Sinemia for patent infringement.

“We intend to continue to be vigorous about protecting our patents in the future,” Lowe wrote.

He said “utilization” (repeat movie viewing) has dropped “significantly” among subscribers since MoviePass ended repeat viewings, instituted ticket verification and price surcharges during peak moviegoing periods.

“Movies are seasonal, and summer is high point,” wrote Lowe. “When we adjust based on seasonality, it has an impact. The new peak pricing feature is also aimed at helping curb heavy use, or supplement that use with more revenue. The important thing is that we’re building pricing to be flexible. We can tweak it as needed.”

 

MoviePass Owner Initiates $164 Million Bond Sale

NEWS ANALYSIS — The corporate owner of fiscally-challenged movie ticket subscription pioneer MoviePass has thrown another Hail Mary.

Helios and Matheson Analytics, which owns 92% of MoviePass, June 21 said it entered into a securities purchase agreement with institutional investors to issue convertible notes (bonds) worth $164 million and 20,500 shares of preferred stock.

HMNY said it would use the funds for general corporate purposes.

The bond sale comes the day after AMC Theatres — a beneficiary of MoviePass foot traffic — announced it is launching its own $20 monthly subscription service.

MoviePass, which recently topped 3 million subs on its way to a year-end goal of 5 million subs, continues to spend millions of dollars per month more than it collects paying exhibitors for tickets consumed by subscribers.

The loss-leader business model has contributed to HMNY stock languishing below 35 cents per share.

New bond holders have the option to redeem the notes within seven months at a conversion price of $1. The preferred stock is not convertible into common stock. Each share of preferred stock is entitled to 3,205 votes per share on all matters on which holders of common stock are entitled to vote.

MoviePass Parent Stock Hits New Low

Fiscally-challenged Helios and Matheson Analytics, parent of movie ticket subscription service MoviePass, saw its stock hit a new low June 5.

The company’s shares closed at 38 cents per share, after falling to 37 cents per share during day in heavy trading (23 million shares). The company’s market cap is $32.1 million. The company’s previous record low was 41 cents per share.

Regardless, MoviePass continues to diversify. May 30 it announced the launch of indie-based MoviePass Films with Emmett Furla Oasis Films, with the intent of marketing indie films to its 2.7 million subscribers across multiple platforms such as theatrical, streaming, retail, on-demand and packaged media.

 

MoviePass Pushes Fiscal Lifeline Fantasy

NEWS ANALYSIS — The corporate parent of fiscally-challenged subscription ticket service MoviePass reportedly claims it has a $300 million lifeline that can keep operations afloat for at least a year.

Helios and Matheson Analytics (HMNY), which owns more than 90% of MoviePass, has been shrugging off its plunging stock valuation (down 98%) as investors question a business model burning through more than $20 million a month offering subscribers daily access to a theatrical movie for a $9.95 monthly fee (or $6.95 based on an annual fee).

The company, in its most-recent fiscal statement, said it had just $15.5 million in available cash. The news sent the stock freefalling to less than 50 cents per share at the close May 23.

Now, MoviePass president Mitch Lowe and Ted Farnsworth, CEO of HMNY, are telling anyone who will listen that they have access to a $300 million line of credit that can sustain operations for more than a year.

But as Business Insider reports, the line of credit isn’t really a line of credit or much of a lifeline. It’s more of a fiscal Hail Mary.

The credit is known as a “at-the-market” (ATM) sale that enables HMNY to sell shares on a daily, weekly or monthly basis to generate funds without impacting the company’s market valuation.

“It’s kind of a science,” Lowe told Business Insider. “It’s a third party that manages it on behalf of HMNY, but essentially some days they might sell, some days they might not sell. It’s all kind of based on what they believe will have the least impact on the valuation.”

But to make the ATM work requires investors willing to buy shares. And with the stock down nearly 8%  at 45 cents per share in early-morning trading May 24, who is going to buy?