Parent company Helios and Matheson announced it will separate MoviePass into a new subsidiary called “MoviePass Entertainment Holdings Inc” — boosting the data analytics company’s shares 42% with the announcement.
According to TechCrunch, Helios and Matheson had a specific idea in mind for MoviePass when they acquired it last year — and it wasn’t to get moviegoers a too-good-to-be-true subscription deal. It was to generate data about the industry and leverage its findings for targeted advertising.
Not even a big data company could see this train wreck coming
MoviePass has blown up since it was founded in 2011, but it has had a rough 2018 after its popularity began to blast past its profits.
Since then, it’s been a horror show for Helios and Matheson, which, according to its press release, is tired of being “synonymous” with its struggling acquisition.
The data analytics company reported an average cash deficit of $45m for both June and July, and took a $100m loss in Q2 that forced it to sell over $1.2B in equity debt.
But, Helios and Matheson have their own dirty laundry
On Oct. 17, New York Attorney General Barbara Underwood opened a probe into MoviePass’ parent company to investigate whether the company committed ‘securities fraud’ by misleading investors about its financials.
Helios and Matheson claims to have released its public disclosures in a “complete, timely, and truthful” manner. That said, one single acquisition doesn’t usually decimate a company’s entire market share (currently valued at $30m) so the AG is right to be curious.