MoviePass’ stock has tanked in recent days on concerns about a cash shortage.
In an interview at the Cannes Film Festival, Ted Farnsworth, head of MoviePass’ parent company Helios & Matheson Analytics, said the subscription service has roughly $300 million available to it from an equity line of credit. The Helios chief is in the South of France to premiere “Gotti,” the John Travolta crime movie that MoviePass is releasing in conjunction with Vertical Entertainment.
“There’s been a feeding frenzy of negativity, but it’s not going to slow us down,” said Farnsworth. “I’m not worried at all. You’re going to see. We’re doing more acquisitions of movies and companies.”
MoviePass faces its share of skeptics. In a public filing last week, MoviePass disclosed it had $15.5 million in available cash — less than it traditionally spends to finance ticket buying on a monthly basis. Shares of parent Helios & Matheson Analytics slid 17¢ on Thursday to 61¢, a 22% decline and the second-lowest close for the stock since the company went public in 1997. Wall Street may have cooled on the service, but Farnsworth hit back, saying, “We’ve got 17 months’ worth of cash without further raises of capital.”
MoviePass allows users to see a movie-a-day for $9.95 a month. That means that it loses money on many of its customers. In order to work, MoviePass pays theaters full price for the tickets its subscribers buy, but in major markets such as New York and Los Angeles, tickets cost as much as $15 a pop. MoviePass said it expects users will stop seeing as many films over time and will eventually see less than two movies a month.
Farnsworth was particularly annoyed with comments made by AMC Theaters chief Adam Aron, who told analysts that he had calculated that MoviePass users were attending the theater multiple times a month and expressed skepticism that the company had been able reduce attendance to the levels it needs to remain profitable. When MoviePass slashed it prices last summer to $9.95 and saw its subscriber levels rise, Aron dismissed the service and said its model was unsustainable.
“They’re trying to put us out of business,” said Farnsworth. “We’ve become a serious threat.”
The Helios CEO said that he was finalizing a major acquisition in the coming days that will be announced at the Cannes Film Festival.
“It’s going to be substantial,” said Farnsworth. “People are going to go, ‘Hmm how did they pull it off?'”