MoviePass’ parent company has launched a $164 million bond sale as the struggling subscription service tries to find ways to stay afloat and boost its dwindling stock price.
Helios and Matheson, a data company that bought MoviePass in 2017, announced that it has reached an agreement with institutional investors to issue convertible notes for that amount, as well as 20,500 shares of preferred stock. The company said the proceeds will be used for “general corporate purposes.”
Since slashing its prices to less than $10 a month, MoviePass has expanded rapidly, attracting some 3 million customers with its low-cost, movie-a-day plan. But it has also faced some liquidity questions. Filings this spring revealed the company had $15.5 million in available cash at the end of April, plus $27.9 million on deposit with merchants. Its monthly expenses totaled $21.7 million, stirring concerns about its ability to pay its bills. An independent auditor raised “substantial doubt” in financial documents made public by MoviePass about the company’s ability to continue operating.
As speculation has mounted about its long-term future, Helios and Matheson’s stock has nosedived. In October, it was trading at $38.86 a share, but on Wednesday, it closed at just over 33 cents a share. It is trying to get its share price above $1, so it won’t be delisted from the Nasdaq.
The company also faces increased competition. Cinemark has launched a subscription service and AMC, the largest exhibitor in the world, unveiled its own answer to MoviePass this week. AMC’s plan costs more, with subscriptions going for just under $20 a month, but it allows people to reserve tickets in advance and watch movies in 3D or IMAX, two things that MoviePass does not offer.