MoviePass Posts Huge Quarterly Losses As Shareholders Sue

Karmic retribution comes fast for MoviePass soon after the ticket-buying service prevented its subscribers from cancelling their subscription plans. The service's parent company Helios and Matheson revealed its MoviePass losses to be an at all-time high, ballooning from less than $3 million this quarter last year to $126.6 million.

To add onto that, MoviePass is also facing potential lawsuits from its frustrated shareholders, who are accusing the company of fraud and misinformation. Looks like karma is working overtime.

MoviePass has officially skipped flying too close to the sun and is now plummeting to its watery death. On the heels of its outrageous move of forcing its customers to enroll in a new subscription plan even as they attempted to cancel, MoviePass finds itself facing its largest quarterly losses yet and potential costly lawsuits.

In Helios and Matheson's quarterly earnings report, the company revealed that its losses have escalated astronomically since last year. In the same quarter last year, MoviePass lost less than $3 million, but this year the company lost $126.6 million in the three-month period ending June 30, 2018.

Not only that, the MoviePass parent company reportedly burned through more than $219 million in the second quarter of 2018 — or approximately $73 million a month — and has only $51.4 million in assets left. If MoviePass continues to bleed money at this alarming rate, the company will run out of money in less than two months, according to The Verge.

To stem the flow of money out of the company, MoviePass has been aggressively cutting costs and taking out loans (which it also is due to pay back), resulting in wildly unpopular actions like the new $9.95 a month plan that limits customers to just three movies a month. All of these Hail Mary changes have been announced with little fanfare, resulting in confused customers and frustrated shareholders who are given little explanation over what is being done with their money.

And it seems like the shareholders have had enough. The Wrap reports that one Helios shareholder has filed a lawsuit against the parent company in New York, accusing CEO Ted Farnsworth and CFO Stuart Benson of defrauding shareholders with misleading or withheld information. Part of the lawsuit reads:

"Defendants carried out a plan, scheme and course of conduct which was intended to and did, deceive the investing public and cause the plaintiff and other members of the class to purchase Helios common stock at artificially inflated prices... Both of the individual defendants are liable as participants in a fraudulent course of business that operated as a fraud or deceit on purchasers of Helios common stock by disseminating materially false and misleading statements and/or concealing material adverse facts."

But that shareholder lawsuit could soon be joined by even more lawsuits, with Twitter account @MoviePassLaw trying to gather dissatisfied MoviePass customers to participate in a class-action lawsuit.

MoviePass has not yet released a statement on fielding its real and potential lawsuits. However, the company did claim that the cancellation error is the result of a "bug," a fine excuse that it has used before when the app crashed after customers tried to cancel subscriptions back in July.

And in what seems like a last-ditch attempt to appease its customers, MoviePass just opened a contest for the "Ultimate MoviePass Getaway," offering the winner and a guest two round-trip flights to LA, a two-night hotel stay, a studio tour, a Hollywood Bus tour, two annual MoviePass memberships and a "swag pack," and a $500 gift card. TBD on whether that $500 gift card will actually work or not.