MoviePass Is Getting Sued By Its Own Stockholders
Okay, so it’s not been a great week for MoviePass. That’s kind of an evergreen sentence at this point, but here is the latest update: According to Deadline, the theatrical subscription service’s parent company, Helios and Matheson, lost $126.6 million last quarter. That is not great.
But that’s just the tip of the iceberg; a class-action lawsuit was also filed against the company on Monday by angry shareholders:
Shareholder Jeffrey Braxton filed suit Monday in federal district court in New York on behalf of hundreds, or potentially thousands, of investors who suffered losses because they were misled about the company’s business and its prospects. Despite press releases touting MoviePass’ subscriber growth, the suit contends its business model was unsustainable and that it was inevitable that the parent company Helios would ‘run out of cash’ or lose so much money as to raise questions about whether it could remain a viable business.
The new MoviePass plan, three movies a month for the old $10 price, was supposed to go into effect today. At least according to the MoviePass users I follow on Twitter, it’s not exactly been a smooth transition.
Meanwhile, MoviePass put a positive spin on things in its own press release, noting that “MoviePass is one of the most widely read business stories of 2018.” Very true! And I imagine getting sued by shareholders will only make that statement even more factual.
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