MoviePass owner makes play to boost stock price
Parent company will give shareholders one share in exchange for 250 shares
Helios & Matheson, which owns popular subscription movie-going service MoviePass, is reorganizing its shares in an apparent move to ensure they can stay afloat on the stock exchange.
The New York-based data analytics firm’s stock closed down about 13 percent Tuesday at 8.5 cents a share after it announced a reverse stock split of its common shares to boost the cost of a single share. A reverse stock split gives shareholders a single share in exchange for a larger amount of shares.
Helios & Matheson said Tuesday that the company will give shareholders one share for each of their existing 250 shares, effective Wednesday.
“We believe this is an important step that will facilitate our access to capital over the next several years and enable us to implement our growth plans for MoviePass, MoviePass Films and MoviePass Ventures, and will enable us to pursue potential acquisitions to grow our business,” said Helios & Matheson’s CEO Ted Farnsworth in a statement.
Helios & Matheson, which owns 92 percent of MoviePass, decided on the reverse stock split after the company’s shares remained below the $1 mark for several months. If a stock trades below $1 for 30 consecutive days, it is in danger of being delisted, according to Nasdaq rules. Helios & Matheson shares have stayed below $1 since May.
Michael Pachter, a research analyst at Wedbush Securities, said the reverse stock split does not reflect whether MoviePass is currently struggling.
“It doesn’t mean MoviePass is doing better or worse,” said Pachter. “You can have 100 shares at a penny or one share at a dollar. It doesn’t reflect the value of the company at all.”
Helios and Matheson did not
immediately respond to questions on its reverse stock split from this news organization.
Last year, Helios & Matheson helped jump-start the MoviePass subscription business model, where moviegoers can watch one movie a day in theaters for a monthly price. But since last fall, Helios & Matheson’s shares have plummeted.
The company also lost $150 million in 2017, largely due to its acquisition of a majority stake in MoviePass in December, according to an annual report the company filed to the Securities and Exchange Commission through an external auditor in April.
The auditor also expressed concerns about the company’s future, saying that MoviePass “may consume all of (Helios & Matheson’s) cash needed for operation” if MoviePass cannot raise new funds.
Earlier this month, Helios & Matheson filed with the SEC that it wants to raise up to $1.2 billion in stocks, debt securities and other funding to keep MoviePass operational.
MoviePass is also facing new competition as startups and theater chains like AMC have begun providing similar subscription-based plans for moviegoers. Starting this month, MoviePass adopted a surge-pricing model where subscribers will have to pay a few more dollars to see blockbusters on opening weekends and at other popular times.
Farnsworth told a specially convened group of shareholders that “theaters don’t like us because we’re too powerful too quick,” and said Monday that the movie-going subscription race is a “full-blown war,” according to Business Insider.