Wall Street is unimpressed with prospects for MoviePass as the stock of parent Helios and Matheson Analytics plunged Wednesday following a reverse stock split.
The company instituted a 1-to-250 reverse stock split, reducing the number of shares outstanding from 268 million to about 1.7 million, two days after shareholders approved a one-time reverse stock split. 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.
For now, the reverse split will prevent a de-listing by Nasdaq, which had warned Helios and Matheson could occur had the stock continued to trade below $1.
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 that 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.
The subscriber count hit 3 million on June 13, but the stock lost nearly all its value in the wake of AMC’s launch on June 20 of a discount pricing program, allowing customers to see three movies a week for a $19.95 monthly fee. AMC Theatres, the world’s largest exhibitor, has been disparaging the popular subscription service as a house of cards for nearly a year as “unsustainable” because MoviePass pays exhibitors the full price of the tickets that it’s subscribers use.