October 17, 2018
MoviePass Parent Company Being Investigated For Potentially Misleading Investors
MoviePass, the movie ticket subscription service that was flying high in early 2018, has been barely clinging to life for the past few months. Their financial failure and series of bone-headed decisions have been well-documented, but if you thought things couldn’t get any worse for them, think again: parent company Helios and Matheson Analytics is under investigation in New York for potentially misleading investors. Yikes.
The attorney general’s office is investigating whether the company misled the investment community regarding the company’s financials, said the person. The investigation is in the early stages.
The attorney general is using the Martin Act, a statute designed to protect New York investors and the integrity of the financial markets from fraud.
There’s no need to run through MoviePass’s entire history of idiotic decisions. We’ve covered almost all of them in detail in real time here on the site, so I’ll just recap the last three months. In early August, MoviePass began automatically reinstating users who had cancelled their plans. They then posted a $126 million quarterly loss while battling at least one lawsuit from a frustrated shareholder. Soon afterward, they limited users’ selection of which movies they could see in theaters to a list of just six films, which rotated every day. They essentially revamped their annual membership, making it worse and forced subscribers to pay monthly instead, and all the while, their app downloads dropped by an astounding 76%. And those are just the highlights. (Or “lowlights,” I suppose.)
That’s a terrible stretch by any metric. When the dust finally settles, though, history will look on MoviePass as the company that brought the subscription model for movie tickets to a wide audience and opened the door for other services to fill the hole they left behind. But depending on the outcome of this investigation, their legacy may be tinged beyond just some dumb business moves – it sounds like if things continue to go wrong for them, they could end up being charged with attempting to defraud their investors.
I’m not normally one to say “I told you so,” but they really should have listened to our suggestions for how to raise money back in June. We had some real winners in there.
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