MoviePass’s owner is looking to break up with the embattled subscription business, which has drained its coffers and obliterated its stock price.
Helios & Matheson Analytics, which acquired MoviePass last year and soon became synonymous with the service, plans to spin off the entity as a publicly held company on the Nasdaq Stock Market.
The move is a bid to restore the reputation of Helios & Matheson after it lost nearly 100 percent of its value this year, hammered by concerns that MoviePass’s losses will torpedo the company. Investors applauded the spinoff idea, sending shares of Helios & Matheson up as much as 51 percent on Tuesday. Still, that only brings the beleaguered stock to 2.6 cents.
Though MoviePass became a cultural phenomenon — attracting millions of customers with its promise of seeing a new movie in the theater every day for $9.95 a month — the mounting red ink and frequently changing subscription terms turned the service into a burden.
“Our shareholders and the market perception of HMNY might benefit from separating our movie-related assets from the rest of our company,” Chief Executive Officer Ted Farnsworth said in a statement, referring to Helios & Matheson’s stock ticker.
The new company will include the common stock of MoviePass, the service’s members and Moviefone, which was acquired from Verizon Communications Inc. earlier this year. Helios & Matheson plans to distribute a minority of the outstanding shares of MoviePass Entertainment as a dividend to its investors, assuming such a move is permitted under Delaware law.
The question now is whether MoviePass can survive on its own. Auditors have questioned the company’s ability to keep operating over the next year. To stem the cash drain, MoviePass rolled out a new model in August that limits subscribers to just three movies a month.
Helios & Matheson, meanwhile, will return to its focus on data analytics, Farnsworth said.
“We own assets like Zone Technologies, which provides a safety and navigation app for iOS and Android users and a global security concierge service,” he said. “Since we acquired control of MoviePass in December 2017, HMNY largely has become synonymous with MoviePass in the public’s eye.”