Is MoviePass In Trouble? Share Price Tumbles After Weekend Outage

Since last August, MoviePass has given subscribers the ability to see a movie every day for just $10 per month. There have been concerns about the viability of the MoviePass business model for months, but over the weekend, things took a serious turn for the worse.

MoviePass stopped working correctly for many customers starting on Thursday evening. Subscribers were not able to “check in” using the MoviePass mobile app and purchase tickets with their MoviePass cards, thus rendering the subscription useless. On Friday, parent company Helios and Matheson Analytics Inc. offered an explanation that sunk consumer and investor confidence in the service, according to CNBC.

The service outage occurred because the parent company was incapable of making “required payments to its merchant and fulfillment processors.” In other words, the company ran out of money and could not pay movie theaters for the tickets that its users were getting for free. Helios and Matheson had to borrow $6.2 million to get things back up and running over the weekend, per the Hollywood Reporter.

What is worse is that the app mysteriously blocked many users from seeing the highly anticipated “Mission Impossible — Fallout” on opening weekend. CEO Mitch Lowe on Friday offered an eyebrow-raising explanation.

“This is no different than other in-home streaming options that often don’t carry the latest shows or movies that may be available on other services,” Lowe said in a statement.

When the market reopened on Monday, Helios and Matheson (HMNY) took a massive hit. Shares of HMNY plummeted 60 percent to close at $0.80.

Founded in 2011, MoviePass made waves by switching to its $10 per month model back in August. Its subscriber count ballooned from 20,000 to 3 million, according to CNBC. A MoviePass card is considered a major bargain in major cities, where one movie ticket usually exceeds the $10 monthly charge on its own.

However, customers have grown frustrated with constantly shifting rules and growing limitations on the service. MoviePass briefly limited some users to four movies per month before walking back the unpopular change in May. The service also introduced surge prices on popular movies over the summer. Customers now have to pay as much as $8 to see movies that are highly in demand.