MoviePass Is Committed To Performing The Greatest Cash Burn Of All Time

Sit back and enjoy the show
Author:
Publish date:

Some stories deserve to be told on the silver screen and live forever in the hallowed halls of cinema. MoviePass parent, Helios & Matheson Analytics Group has one of those stories. And it's a tragedy.

pasted-image-0

A tragedy so grand and profound that Arthur Miller would have mistaken it for softcore pornography. On July 26th, MoviePass stopped functioning temporarily because Helios & Matheson is more broke than a saltine cracker at the bottom of a backpack

The $5.0 million cash proceeds received from the Demand Note will be used by the Company to pay the Company’s merchant and fulfillment processors. If the Company is unable to make required payments to its merchant and fulfillment processors, the merchant and fulfillment processors may cease processing payments for MoviePass, Inc. (“MoviePass”), which would cause a MoviePass service interruption. Such a service interruption occurred on July 26, 2018. Such service interruptions could have a material adverse effect on MoviePass' ability to retain its subscribers. This would have an adverse effect on the Company’s financial position and results of operations.

And investors responded appropriately

The shares fell $3.83, or 56%, to $3 as of about noon New York time.

This news comes days after the company announced a 250-1 reverse stock-split in an attempt to raise share prices, but just like the cash MoviePass received today, this was like putting a duct tape on over a leaking BP Pipeline.

The company pays the full price for every movie that users go to see, and the subscription only costs $9.95 per month, so how does this company make any money?

Easy Answer. They don't.

And they're fine with that. In fact, it's part of the plan.

Because the MoviePass allows subscribers to see up to one film a day in theaters for $9.95 a month while paying theaters full price for each ticket, the company burns $21.7 million a month according to previous SEC filings. On Wednesday, Helios and Matheson was forced to implement a massive reverse stock split that brought shares up to $21 to prevent the company from being delisted from Nasdaq.

"We feel at this point MoviePass is well on its way," Helios and Matheson CEO Ted Farnsworth told TheStreet after the stock split was announced. "We understand the cash burn and the different things that are going on with it but also the positives and how much leverage we have over a movie when we tell subscribers to go see it."

"We're not going anywhere," Farnsworth said. "We're good for the next several years."

On Wednesday, the CEO assured the stockholder's everything was fine and they are going to stick around for a few more years. And they are, as long as your definition of 'fine' is a cash-burning dumpster fire that struggles for investments, and your definition of a 'few more years' is 48 hours.

Despite woes and terrible share price, we should take time to recognize that this is arguably the greatest cash-burning performance of our lifetime. MoviePass make Tesla look like a conservatively run car manufacturer with a tight balance sheet in comparison.

They borrowed $6.2 million and they spend around $21.7 Million a month according to the SEC filings, so it looks like this cash is going to last for.... ummmm ..... hold on, let me make sure my math checks out here .... around 8 and a half days.

Just like nerds packing the theatre to watch Star Wars, financiers everywhere can't look away from this beautiful shitshow.

Helios And Matheson Analytics Inc. SEC Filing [SEC]

MoviePass parent Helios and Matheson implements 1-to-250 reverse stock split, boosting share price [Marketwatch]

MoviePass Parent Loses Half its Value After Cash Shortage Interrupts Service [The Street]

Related

Vikram Pandit Is Committed To Getting Paid

If you didn't know Chief Executive Officer Vikram Pandit, you might think he enjoyed not being compensated for the work he does at Citigroup because for quite some time, he wasn't. And although the "I will only get paid $1/year until Citi turns a profit" exercise was fun for a while, he was pretty happy when the old jalopy started making money again, in part because it meant he could receive a paycheck. Then last April, his shareholders rejected the bank's executive pay plan, claiming the Big C "lets Chief Executive Officer Vikram Pandit collect millions of dollars in rewards too easily." And while it's possible that Citi shareholders are just a bunch of pricks who chose to overlook the fact that Uncle Vikula didn't collect squat for several years and once had an entire article written about the fact that lieutenants attributed a "new bounce in his step" to him daydreaming "the day when he is going to earn more than a $1 a year,” maybe they just assume that he doesn't care about getting paid either way? Anyway, here's Vickles, reminding anyone who forgot about the sacrifices he made and setting the record straight: “The board has this process with them, they’re going through it, and they are committed, as I am, to making sure that they resolve this,” Pandit said. “I want to get paid what the board thinks is right for me, for the job that I’ve done and for the incentives that they think I ought to have.” Pandit told lawmakers in 2009 that he would take a $1 annual salary until he restored the bank to profitability. Citigroup made a $21.7 billion profit for 2011 and 2010 combined, compared with a $29.3 billion loss for the two preceding years. “When the company was losing money, I stepped up and said I’ll take a dollar a year and I did, exactly for that reason, exactly the right thing to do,” Pandit said. For those having trouble separating the nice guy/don't want to offend anyone statement from what he's actually trying to say, a rough translation of the above would be: get me paid, bitch! Citigroup Will Resolve CEO Pay By End Of Year, Pandit Says [Bloomberg]