MoviePass’s Latest Subscriber Restrictions Help Fuel Stock Rally
(Bloomberg) -- MoviePass Inc. customers may grumble about the latest restrictions on the popular app, but investors are cheering.
The embattled moviegoing service and parent company Helios & Matheson Analytics Inc. said on Monday that subscribers will be able to see just three films per month -- down from the current level of one a day. Users will be offered a discount of up to $5 on any additional tickets when the new policy takes effect Aug. 15.
The company is describing the new approach as a more sustainable business model, and shareholders showed signs of relief on Monday. After initially more than doubling, Helios & Matheson shares were up 32 percent in New York. Still, the stock has lost almost all its value this year and is trading below 10 cents.
MoviePass said earlier that it would raise its monthly price to $14.95, but the company decided against that move after negative feedback. It expects the new policy to have no effect on 85 percent of subscribers, since they already see three or fewer movies a month.
“Any industrywide disruption like MoviePass requires a tremendous amount of testing, pivoting and learning,” MoviePass Chief Executive Officer Mitch Lowe said in a statement.
In recent weeks, MoviePass has struggled with dwindling cash and had to take an emergency loan. Lowe and lead investor Ted Farnsworth have said that they expect MoviePass to become profitable at 5 million subscribers. At the last count, the service had topped 3 million.
To contact the reporter on this story: Anousha Sakoui in Los Angeles at asakoui@bloomberg.net
To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net
©2018 Bloomberg L.P.
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