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MoviePass Parent’s Stock Plunges After Warning on Growth Reduction

The stock of MoviePass’ parent company Helios & Matheson has lost 31% of its value after warning that the subscription service may be forced to reduce future growth.

Tuesday’s decline came following a Securities and Exchange Commission filing by Helios & Matheson. The company disclosed it had $15.5 million in available cash at the end of April, plus $27.9 million on deposit with merchants while current monthly expenses are about $21.7 million.

The filing said that if adequate funding, either through an existing equity distribution agreement or other sources doesn’t materialize, “We may be required to reduce the scope of our planned growth or otherwise alter our business model, objectives and operations, which could harm our business, financial condition and operating results.”

Shares were down 66 cents to $1.45 in trading on Tuesday.

MoviePass announced on May 2 that it would again allow customers to sign up for its popular movie-a-day monthly subscription package after briefly taking the offering off of its website. An independent auditor publicly raised questions last month about the service’s ability to continue operating.

The company pays movie theaters full price for the tickets its customers buy, so it is essentially subsidizing their movie-going at a loss to its own bottom line. MoviePass claims that it will eventually be able to monetize its more than two million subscribers by running ads, partnering with theater chains, or figuring out a way to make a profit on the data it collects on its users.

“In 2018, we expect our cash deficit from month to month will vary significantly,” Tuesday’s filing said. “Based on the amount of movie tickets MoviePass is required to purchase for its subscribers during the month, the amount we spend on acquiring financial interests in additional movies through MoviePass Ventures, the amount we may spend on any other types of acquisitions, and our ability to develop the MoviePass business model in the near term generally, including developing and growing sources of revenue other than subscription revenue. Because the length of time and costs associated with the development of the MoviePass and MoviePass Ventures business model is highly uncertain, we are unable to estimate the actual funds we will require.”

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