MoviePass Plans to Raise $1.2 Billion Despite Questions About Sustainability

July 2, 2018, 8:10 PM UTC

In an effort to keep its money-losing business afloat, MoviePass’ parent company, Helios and Matheson Analytics, plans to raise $1.2 billion by selling more shares.

The plan, revealed in a regulatory filing with the Securities and Exchange Commission, is to offer institutional investors debt and equity so that MoviePass can keep the lights on as well as continue to expand, Helios and Matheson CEO Ted Farnsworth told the Hollywood Reporter.

It remains to be seen whether investors will actually buy into this strategy as recent reports suggest MoviePass, which lets subscribers see unlimited movies for $10 a month, is burning through cash. Filings earlier this year showed that MoviePass had a combined $43.4 million available between its own cash and what is on deposit with its merchant processors, while the company’s monthly expense at the end of April totaled $21.7 million.

Helios and Matheson shares, meanwhile, fell nearly 29% to 22 cents a share during Monday afternoon trading. In October, the company’s stock was at $38.86.

But MoviePass has continued expand since it reduced its monthly subscription price to $10 and currently has more than 3 million subscribers. Additionally, Helios and Matheson in recent months launched two accompanying projects: MoviePass Films, a production house, and MoviePass Ventures, a film investment subsidiary.

“They’ve been predicting our demise for eight months and we’re still standing,” Farnsworth told the Hollywood Reporter. “Now we’ll have a big war chest behind us.”

In addition to potential fears from investors, MoviePass faces another obstacle, however: competition from AMC. The theater chain recently rolled out its own $20 per month version on MoviePass, with varying perks.

Farnsworth told THR that news of AMC’s subscription plan likely led to a 25% surge in MoviePass subscriptions, since most articles mentioned that MoviePass was cheaper.