MoviePass Parent Company Stock Drops 12% To All-Time Low Of 54 Cents
May 22, 2018
MoviePass Parent Company Stock Drops 12% To All-Time Low Of 54 Cents
Skies over MoviePass grew darker today, as parent company Helios & Matheson Analytics saw its stock price drop another 12% to close at an all-time low of 54 cents.
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The share price has plunged more than 75% this month alone after execs warned in a recent SEC filing that they were running low on cash reserves. Exhibitors, Wall Street investors and even many customers continue to express skepticism about the long-term viability of MoviePass, though execs insist they have a sound strategy and access to hundreds of millions of dollars in additional financing. They continue to pursue a strategy of signing up as many fixed-rate subscribers as possible, at a rate of just $9.95 a month. Subscriber levels are at 3 million and the company expects to be north of 4 million by year-end.
Expenses, though, have averaged $22 million a month, as the company must pay exhibitors for each ticket members buy, even though member revenue is capped by the monthly fixed price. In a blog post for Seeking Alpha yesterday, start-up investor Julian Lin of Hillcrest Venture Partners estimated the company would need $700 million in additional funding in order to reach 10 million subscribers.
Down the line, MoviePass sees its biggest opportunity in data mining, mainly the selling of user data to third-party advertisers.
Even after the worrisome filing noted the company had just $15.5 million in available cash reserves at the end of April, management noted a silver lining. Rules changes it restricted the sharing of membership cards and limited members to one movie per day.
Lin took a stark view of the company’s finances. “Even using incredibly optimistic assumptions,” he wrote, the company “may still be way overvalued.” In taking a closer look at the balance sheet, he added, “it becomes clear why Wall Street has thus far shown a complete lack of interest in buying their stock.”