MoviePass Pays Off Debt But Pain on Wall Street Persists

Mitch Lowe CEO of MoviePass - Getty - H 2018
Vivien Killilea/Getty

Stock in parent company Helios and Matheson Analytics has sunk about 98 percent in a few weeks' time.

MoviePass solved one of its problems by paying back money it hastily borrowed to get its service back up and running, but you wouldn't know it by the reaction on Wall Street, where shares of its parent company were nearly halved in midday trading on Wednesday.

The massive drop in the value of the shares of Helios and Matheson Analytics has been a running theme for a few weeks, ever since the company reverse-split its stock at the rate of one new share for every 250 owned. The stock sold for $20 a share immediately after the reverse split, but was at just 26 cents on Wednesday.

That gambit was designed to maintain the company's Nasdaq listing, since a $1 per share minimum is required, and it was also part of Helios and Matheson's grand plan of raising $1.2 billion to keep MoviePass growing, including via acquisitions.

With the stock sinking some 98 percent in a couple of weeks' time and trading right back to where it was, under a buck a share, despite the reverse split, it remains to be seen how much of that $1.2 billion Helios and Matheson can possibly raise.

Amid this pain, MoviePass had suffered an outage of its pioneering but troubled subscription service because it wasn't paying some merchant debts, so it quickly borrowed money, then, as of Wednesday, quickly paid it back.

MoviePass has roughly 3 million subscribers at $10 per month for a movie ticket per day, but the company is raising its price to $15 a month while trying to dissuade subscribers from using the service too often, hence it won't allow users to see movies until two weeks after they have opened wide.

Also on Wednesday, MoviePass was again touting its positive effect on the box office: 31 percent of its users saw Ocean's 8 compared to 5 percent of the U.S. moviegoing public; with Game Night, it was 25 percent compared to 3 percent; Blockers boasted 18 percent to 3 percent; and Hereditary was 13 percent to 2 percent.

MoviePass says it will top 5 million subs by year's end, but that goal might be difficult to achieve with a higher price coupled with a diluted service.

MoviePass also has competition from AMC, which launched a $15-per-month service for three movies a week at its giant chain of theaters, and from Sinemia, which offers two movies a month for $10. Both of those plans have fewer restrictions on them than does the MoviePass offering.