Oops. If you used your MoviePass credentials last week, you might have found they didn’t get you into the movies.
Oh, sure, the app confirmed that you reserved your slot. Except, there was a little problem. No money in the till. So, MoviePass couldn’t fund your “credit card” to pay for the movie. (The app claimed that there were “technical issues with our card-based check-in process”. They also sent out TheDonald like tweets [i.e., fake news] about the problem. To wit: “To our subscribers – we are aware [and] investigating an issue that is preventing users from checking-in to movies this evening. We ask for your patience as we look into this and recommend waiting for further updates before heading to the theater.” )
MoviePass claims they solved the (non-existent?) problem, though. They took out a $ 6.2 million loan (from Hudson Bay Capital Management) – which included $1.2 million in fees (which means they only got $ 5 million in cash!) to pay their vendors and continue operations. Except that loan has the look of a payday loan- or maybe one you’d get if you visited your local loan shark.
[Hint: If your company is in trouble- unless you know you are getting a cash infusion in a week- this is NOT the way to save your firm! And, it’s really poor form to lie about any problems.]
Which may explain why the stock (Helios & Matheson) has fallen from $ 32.90 to about $0.08! (By the way, it may also explain why H&M implemented a 1 for 250 reverse split. That means they converted 250 shares to 1, after the split- which meant they were no longer a “penny stock”. But as of close of business last week, the stock had already dropped from $ 10 [post-split] to $ 2.50) And, why if you want to see Tom Cruise’s new movie (Mission Impossible) via your MoviePass credentials, you need to pay a special fee, which they call “surge pricing”.
Back to that loan. Hudson Bay has the right to demand half the loan payment ( $ 3 million) this Thursday (1 August), with the rest due Monday next (5 August). If MoviePass is more than 48 hours late with the payment, the debt is due at 130% of the loan value.
While the firm had some $ 43 million in the bank (in May), with a burn rate of $ 20 million a month, it doesn’t take a genius to realize when the y intercept will be reached.
I, for one, hope they survive. My membership is paid through November.
That sounds terrible and I hope for your sake they survive too.
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See my reply to Amrita. But, I do plan to start going to the movies again and make use of my app, Mary.
I hope they survive too.Atleast till your membership
I decided to start going to the movies again to get my money’s worth. (I already saved money, since my annual purchase was at a discount. I have seen about 10 movies- that would be at least $100, more than I paid for the app.)
I’m glad I don’t use MoviePass! My heart goes out though to those who do. I hope there’s a happy ending to this.
The key point, Maria, is even with this failure, you can see 1 movie every single day of the month for $ 10 or less. So, even if it failed now- and you used it even thrice monthly, you came out ahead.
Yikes. Sounds like serious mismanagement on their part. It also does not sound very encouraging for them.
I think the PR was mismanagement for sure, Julia. But, the business model has two prongs- first to have enough members that the cinema industry will offer them discounts or buy their data and the second is to sell the data (who is at what movie and when) to restaurants and bars (to advertise their wares before or after the movies). They don’t have quite enough subscribers yet in each region to do the data sell yet.
$32.90 to $0.08??? I ‘m glad I didn’t have that stock! I never go to the movies so I’m good, I didn’t get Movie Pass.
That’s for darned sure, Martha!
I started going to the movies again (about once a week for three months) when I got the pass. Then, I lost interest- actually the movies failed to picque mine!