Can MoviePass parent Helios and Matheson survive? The company, which offers subscriptions to see movies in theaters, may have just enough cash to cover the next three to six months, but management insists it can make it.
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“Our burn rate is down to approximately $12 million a month from where it was,” Helios and Matheson Analytics CEO Ted Farnsworth told FOX Business’ Neil Cavuto on Wednesday in an exclusive interview. “Wall Street loves this story, they love a growth story, we have over 3 million subscribers, nobody is even close to us,” he said.
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Investors are not so sure. The stock, now trading in pennies, slid again on Wednesday, a day after the company posted a second-quarter operating loss of $126.6 million, according to regulatory filings. The stock has plummeted 99% over the past three months. Helios and Matheson also recently approved a 250-to-1 stock split to boost its share price, in addition to filing a registration statement with the Security and Exchange Commission to raise $1.2 billion.
The MoviePass model was initially celebrated by investors as innovative and has been described as the “Netflix” of movie theaters. MoviePass CEO Mitch Lowe has held senior roles at both Netflix and Redbox.
Lowe and Farnsworth doubled down saying the company is still innovating and growing subscribers. It is betting on its new subscription plan of three movies a month for $9.95 to reverse the company’s cash flow struggles.
“It appeals to the people that have been abandoning the movie theater,” Lowe told FOX Business during the same interview. “Just in the first day, we’ve already had over a million of our [existing] subscribers already say, ‘I want this new plan.’” The company also got pushback after some users attempted to cancel their subscriptions, only to find it didn't take. Lowe said the blunder was a technical glitch and “it’s totally fixed on our side.”
In total, the company boasts 3 million subscribers, a number Cavuto noted could attract potential suitors.
“Media companies are contacting us all the time,” said Lowe while declining to disclose any names.
*The original story has been updated.