MoviePass owner's shares jump after unveiling new business plan

Shares in the struggling MoviePass owner Helios and Matheson Analytics (NASDAQ:HMNY) got a boost Monday as investors cheered the arrival of its new business plan.

By the afternoon, the company’s stock had climbed 33% to US$0.093.

But having seen its shares engage in a death spiral from a 52-week high of US$9,715 to less than a $1, do investors have much reason to hold out hope?

On the table, as of August 15, is a new proposal that will allow subscribers in the popular MoviePass program to see up to three movies per month for US$9.95 and also receive a US$5 discount for any movie tickets beyond the first three.

The company is also abandoning a jump in its price to US$14.95 and sticking to its monthly fee of US$9.95.

Read: MoviePass parent’s CEO shrugs off cash burn worries and the competition to write company’s own script

Monthly subscribers, who can still cancel anytime, will have the chance to take part in the new plan when they renew their membership. And annual subscribers will not be forced to adopt the new plan until their contracts are renewed.

Since just 15% of MoviePass members watch four or more movies per month, the management of Helios and Matheson expects the new business model will have no impact at all on most of its subscribers.

“It has become clear that a small number – only 15% – of the subscriber base has been stressing the system,” said Ted Farnsworth, Helios and Matheson’s  CEO, in a statement.

The new business model for MoviePass comes in the wake of a cash crisis for Helios and Matheson and the cratering of its share price.

Read: MoviePass parent Helios and Matheson shares plummet after revealing service outage due to cash problems

Helios and Matheson Analytics disclosed in a filing with the Securities and Exchange Commission last April, that it was burning through as much as US$20mln in cash per month on average. Signalling that its cash burn problems are not behind it, two weeks ago, the MoviePass app also crashed as the company was forced to borrow US$5mln in emergency cash to pay its vendors.

Last month, in what appeared to be a cosmetic change designed to keep its Nasdaq listing intact, the company orchestrated a reverse stock split, which gave investors 1 share for every 250 owned. The move set a temporary fire under Helios and Matheson’s shares, pushing them up over US$22, but the stock has been plunging ever since.

Story by ProactiveInvestors