MoviePass parent Helios and Matheson has quietly posted its quarterly earnings report, revealing that operating losses have ballooned from less than $3 million this quarter last year to $126.6 million in the three-month period ending June 30, 2018. Losses undoubtedly stem from MoviePass’ struggle to generate revenue from its theater subscription service, which launched just under a year ago for $9.95 a month after the company sold a majority of its stake to Helios and Matheson.
The report also shows that the MoviePass parent burned through more than $219 million in Q2 2018 — or approximately $73 million a month — and has only $51.4 million in assets left. That run rate is more than triple the $21 million a month rate we last reported in May. If this continues, MoviePass will run out of money in less than two months.
MoviePass has been aggressively attempting to curtail operating costs over the past few months. Last week, it announced that while its monthly subscription price will remain $9.95 monthly of a previously announced $14.95, it will now limit customers to seeing just three movies a month. (The same plan was previously offered at $7.95 a month.) Customers are now reporting that they’ve been opted into this new subscription plan even after cancelling their accounts. (MoviePass claims the cancellation error is the result of a “bug,” an explanation it used before when the app crashed after customers tried to cancel their subscriptions back in July.)
Helios and Matheson notes in the earnings report that it intends to — yet again — sell new shares to raise money to keep MoviePass afloat. But adding to its problems, The Wrap reports that one shareholder has filed a lawsuit against Helios and Matheson in New York, accusing CEO Ted Farnsworth and CFO Stuart Benson of defrauding shareholders with misleading or withheld information in order to portray the company’s future as rosier than it actually was. The Wrap quotes part of the lawsuit as reading:
“Defendants carried out a plan, scheme and course of conduct which was intended to and did, deceive the investing public and cause the plaintiff and other members of the class to purchase Helios common stock at artificially inflated prices… Both of the individual defendants are liable as participants in a fraudulent course of business that operated as a fraud or deceit on purchasers of Helios common stock by disseminating materially false and misleading statements and/or concealing material adverse facts.”
Meanwhile, the Twitter account @MoviePassLaw has been trying to gather followers to participate in a class-action lawsuit on behalf of MoviePass members. It’s unclear how serious that plan is, given the tenor of the account, but some users are obviously seeking a focus for their frustrations, and finding it in trading MoviePass stories through the account.
Details on how to get involved in Moviepass class action lawsuit coming late next week. Working with our lawyers late into the night tonight.
Don’t worry. We will all get reimbursed for the abuse, manipulation, and neglect we have experienced dealing with this horrible company.
— MoviePass Class Action Lawsuit (@MoviePassLaw) August 12, 2018
Update 7/15, 1:30AM ET: Added information on the MoviePass shareholders’ lawsuit and call for a customers’ lawsuit.