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MoviePass' Days Look Limited (bloomberg.com)
Kyle Stock writes via Bloomberg: Eight months after slashing its price and expanding membership past 2 million users, MoviePass is now at risk of going bust. The parent company, Helios & Matheson Analytics, which now owns 92 percent of MoviePass, said last week that it had just $15.5 million in cash at the end of April and $27.9 million on deposit with merchant processors. MoviePass has been burning through $21.7 million per month. A U.S. Securities and Exchange Commission filing last month revealed that the company's auditor has "substantial doubt" about its ability to stay solvent. Michael Pachter, an analyst at Wedbush Securities Inc., warns that MoviePass may not survive the summertime run of blockbusters. On Tuesday, Helios reported the performance of MoviePass for the three months ending on March 31. The company lost $107 million, earning just over $1 million from marketing deals and $47 million from subscriptions. Helios shares have fallen to decade lows of less than $1 after peaking at $32.90 in October, alongside the MoviePass hype.
"MoviePass has been burning through $21.7 million per month."
"MoviePass for the three months... lost $107 million, earning just over $1 million from marketing deals and $47 million from subscriptions."
It doesn't take a genius to work out that 48/3 = 16 and thus you're earning $5.7m less every month than you're actually taking in.
Your business model is literally worse than "Let's burn $5.6m in cash each month on a big bonfire".
We honestly need - as a planet - to put in laws that stop this shite. I know the shareholders are the main ones being burned, but if after a year of operation you can't show overall profit (or at the very least, contracts GUARANTEEING that the profit will be repaid and progress towards fulfilling those contracts), you should just be shut down. And then again each year. Hell, you shouldn't even be allowed to get to things like IPOs etc. at that point.
Yes, I have owned a business. It wasn't large, I don't claim that. But I never made a loss, not once.
I know that with shares, it's a case of "who's left holding the hot potato" and up until that point people can profit from nothing more than hype, but we need a way of stopping people just taking investments, burning through them, without a single profitable year.
Yes, that would mean no Amazon (or at least, an Amazon starting up in a very different way). But it would also mean that there wouldn't be a thousand Amazon wannabes all doing the same and losing people's money, because it's not JUST the shareholders who lose out. Everyone from employees to suppliers to the taxpayer loses out from such things.
I could sort of it see working, if say all the tickets available were for the quiet-periods, unsold seats, etc., if they were buying up the seats en-masse for a cheap price (saving the theatre having to advertise them, etc. as they're already "sold" as far as they are concerned), or something but... MoviePass don't seem to be doing that.
The Wiki article literally says that they load the cost of the movie onto a pre-paid debit card, which you use to buy the movie. So you pay $X a month. And they give you $Y each day. Unless X > 30Y, I can't see how they ever could make money. And when it is, nobody would bother with it.
But just... giving away a movie ticket every day for the price of a movie ticket once a month isn't that appealing a business model, especially once you stick a middleman into it, apps, pre-paid card numbers, etc.
At what point were they going to morph that business model into something that actually makes profit?