The stock, which recovered somewhat from its intraday low of $2.12, closed at $2.55, down 33% for the day. It has been on a wild ride over the past few months, topping $20 last fall before falling back to earth.
Helios & Matheson, which owns 92% of the movie subscription service (Verizon has the rest), today issued 10.5 million Series A-2 units. Priced at $2.75, each unit includes one common share of common stock plus additional warrants. The plan is to raise an additional $150 million to fund MoviePass. The subscription service has rattled exhibitors but intrigued consumers with its fixed-price strategy, with many industry veterans questioning its long-term viability. After slashing monthly prices to under $10, MoviePass saw subscriptions break past 2 million, but there is now an urgency to bankroll operations as it looks to add subscribers. (Thus the new stock offering.)
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“Helios and Matheson may use the net proceeds from this offering to increase the company’s ownership stake in MoviePass or to support the operations of MoviePass and MoviePass Ventures; to satisfy a portion or all of any amounts payable in connection with previously issued convertible notes; and for general corporate purposes and transaction expenses,” the company said in a press release. “The company may also use the proceeds to make other acquisitions.”
More negative sentiment has swirled around the company over the past 24 hours after a Business Insider report said an auditor has raised “serious” questions about the company’s business model. CEO Mitch Lowe, who was a founding exec at Netflix, has predicted MoviePass can turn a profit by 2019.
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