The subscription service began tweeting on Thursday evening about “an issue that is preventing users from checking-in to movies” and said it was working to resolve the problem. The company said its e-ticketing function was still working. The outage took place during preview showings of Tom Cruise’s “Mission: Impossible — Fallout,” which grossed an impressive $6 million on Thursday night in North America.
MoviePass then tweeted on early Friday afternoon that it had resolved the issue.
In a Securities and Exchange Commission filing on Friday, Helios and Matheson disclosed that the service interruption had taken place because the company ran out of cash.
“The $5.0 million cash proceeds received from the Demand Note will be used by the Company to pay the Company’s merchant and fulfillment processors,” Helios and Matheson noted in the filing. “If the Company is unable to make required payments to its merchant and fulfillment processors, the merchant and fulfillment processors may cease processing payments for MoviePass, Inc. (‘MoviePass’), which would cause a MoviePass service interruption. Such a service interruption occurred on July 26, 2018.”
Helios and Matheson borrowed $6.2 million from Hudson Bay, including $5 million in cash, according to the filing. The company has to pay off the loan by Aug. 5.
MoviePass CEO Mitch Lowe issued a statement Friday after the service was restored, saying, “First, we sincerely apologize for the inconvenience caused from the temporary outage in the app over the past day. We have handled the issues on the back-end, and our app is now up-and-running with stability at 100%. We thank you for your patience and your ongoing support.”
Lowe also addressed the “peak pricing” surcharge that was introduced several weeks ago for the most popular titles at the most popular showtimes with a cost between $2 and $6.
“This month, we introduced demand-based pricing to MoviePass,” he said. “The first of those features, Peak Pricing, has rolled out nationally. Bring-a-Guest and Premium Features (ie., upgrades IMAX 2D & 3D, RealD, and more) will begin rolling out soon. We will continue to refine Peak Pricing and adjust the algorithm to take into account a lot of the feedback we’ve received in the past couple of weeks, and we thank you for your patience as we continue to evolve MoviePass into the best low-cost option in entertainment. Together, we are reviving moviegoing – and everything that goes along with it.”
Shares had been trading at well under a dollar in recent weeks, but with that split, shares of Helios opened at $14.23 on Wednesday, then declined steadily to close at $10.60 a share, then closed at $6.83 on Thursday. The issue lost 70% of its value in trading on Friday, falling to $2.
The issue was trading above $38 last fall in the wake of launching its subscription service allowing customers to see a movie a day for a monthly fee of $9.99. But Wall Street has been losing faith in whether MoviePass can survive by selling data about its customers and striking marketing partnerships. The issue took a major hit after a May filing with the Securities and Exchange Commission revealed it had $15.5 million in available cash at the end of April, plus $27.9 million on deposit with merchants while monthly expenses totaled $21.7 million.