MoviePass’s parent company is getting crushed after offering new stock

Published April 19, 2018

Helios and Matheson Analytics is looking to push additional capital into its prime and wildly popular asset, MoviePass, by raising money in a new stock sale that appears to be giving Wall Street fits.

Looking to raise additional capital, Helios and Matheson said it would sell up to $150 million in a stock sale that essentially seems geared to fund MoviePass’s expansion. Helios and Matheson is the largest shareholder of MoviePass, which is an increasingly popular service for going to watch movies. MoviePass’s parent company saw a sharp decline in its stock price today, with its value dropping around 40% as a result of the announcement.

“Helios and Matheson may use the net proceeds from this offering to increase the Company’s ownership stake in MoviePass or to support the operations of MoviePass and MoviePass Ventures; to satisfy a portion or all of any amounts payable in connection with previously issued convertible notes; and for general corporate purposes and transaction expenses,” the company said in the release. “The Company may also use the proceeds to make other acquisitions.”

Helios and Matheson recorded a net loss of around $150 million in 2017 (attributed to its acquisition of the majority stake in MoviePass). The company acquired a majority stake in MoviePass toward the end of last year. At the end of 2017, the company had around $25 million in cash and cash equivalents, according to their last annual report.

MoviePass allows users to spend around $10 per month to get one ticket to a movie every day, albeit with some strings attached. But it offers a way for theaters to fill seats and still acquire revenue from concessions and other products while allowing viewers to actually get in the door without paying a steep ticket price that might come with that movie.