- MoviePass on Tuesday announced a slew of measures designed to shore up its finances, including higher monthly rates and black-outs on some of the hottest movies.
- The stock more than doubled after the announcement – but then quickly sank back into the red below $1.
- MoviePass customers have reported widespread service issues since the company first said it received an emergency loan last week.
After a string of service interruptions and a near-constantly falling stock price, MoviePass’ parent company finally found some good news for investors – but it only briefly helped the struggling stock.
Helios & Matheson – the company that has become synonymous with MoviePass since its purchase of the subscription service last year – announced Tuesday that it would raise its monthly fee to $14.95 “within the next 30 days” while also limiting availability of high-demand movies.
“Over the past year, we challenged an entrenched industry while maintaining the financially transparent records of a publicly traded company,” CEO Ted Farnsworth, said in a press release. “We believe that the measures we began rolling out last week will immediately reduce cash burn by 60% and will continue to generate lower funding needs in the future.”
The announcement came one day after executives told staff of the new measures in an all-hands meeting on Tuesday.
Because MoviePass has to pay the full ticket price for all the movies its subscribers go see, eliminating major releases going forward means the cash-strapped company would pay millions less. (As of mid-July, MoviePass paid more than 1.15 million tickets for just “Avengers: Infinity War.”)
Shares of HMNY skyrocketed as high as $2 from their opening price of $0.73 following the announcement – triggering at least two trading halts in the process – before sliding back below the $1 mark that it has struggled to maintain in the past week.
After receiving a warning from Nasdaq that it could be delisted, HMNY last week announced a reverse stock split, giving shareholders 1 share for every 250 they previously owned. This week’s slide, however, has taken the stock price back below $1. The company must maintain a trading price above $1 for 10 consecutive business days, the stock exchange’s requirements say.
“These changes are meant to protect the longevity of our company and prevent abuse of the service,” MoviePass CEO Mitch Lowe said in the press release. “While no one likes change, these are essential steps to continue providing the most attractive subscription service in the industry. Our community has shown an immense amount of enthusiasm over the past year, and we trust that they will continue to share our vision to reinvigorate the movie industry.”
Jason Guerrasio contributed to this report.