MoviePass Parent Stock Hits New Low

MoviePass - H - 2018

The company says it could turn profitable in the first half of next year by striking ticket and concession revenue-share deals.

The hits keep coming — not in a good way — for MoviePass, with shares of parent company Helios and Matheson Analytics hitting a new low of 24 cents apiece on Tuesday, down from $10 earlier this year and a high of $132 two decades ago.

The stock was off 13 percent in midday trading with the drop coinciding with a Business Insider report that says Muralikrishna Gadiyaram, a Helios and Matheson board member, had his bank accounts frozen by police in India and was kicked off of two Indian stock exchanges, all in the past three months.

Gadiyaram also was CEO of the Indian parent company of Helios and Matheson two years ago when a court ordered that the company be liquidated amid accusations of fraud and unpaid bills, according the Business Insider story.

But to be fair, there are several catalysts for Tuesday's stock decline, including: MoviePass is losing about $45 million a month on its plan that gives subscribers 30 movie tickets for the price of one; it may need to spend $1.2 billion more if it is to stay afloat and keep growing; the parent raised $164 million a week ago in debt and equity to bankroll MoviePass; and Helios and Matheson is considering a reverse split of its shares so it doesn't get delisted on Nasdaq.

Plus, AMC rolled out a competing product that gives users three tickets a week for $20 a month and Alamo Drafthouse is beta testing a service of its own, as well, causing investors to wonder how many exhibitors would choose to share ticket and concession revenue with MoviePass rather than launch their own subscription services.

MoviePass is the undisputed leader and pioneer in the industry, having amassed 3 million subscribers in 10 months, though it pays nearly full price for the tickets its subscribers use so, in theory, the company loses money on each sub who sees more than a movie per month.

MoviePass says it could turn profitable in the first half of next year by striking ticket and concession revenue-share deals, pushing coupons to its users and selling and monetizing their data in a host of ways. It also has a movie investment subsidiary called MoviePass Ventures, though it hasn't done too well with Gotti, considering the film starring John Travolta has earned just $3.2 million since opening 11 days ago.