MoviePass Hit by Outage After Temporarily Running Out of Cash
MoviePass has been hit by a service outage after its parent company Helios and Matheson Analytics ran out of cash temporarily.
The subscription service began tweeting on Thursday evening about “an issue that is preventing users from checking-in to movies” and said it was working to resolve the problem. The company said its e-ticketing function was still working. The outage took place during preview showings of Tom Cruise’s “Mission: Impossible — Fallout,” which grossed an impressive $6 million on Thursday night in North America.
To our subscribers – we are aware an investigating an issue that is preventing users from checking-in to movies this evening. We ask for your patience as we look into this and recommend waiting for further updates before heading to the theater.
— MoviePass (@MoviePass) July 26, 2018
We've determined this issue is not with our card processor partners and will be continuing to work on a fix throughout this evening and night. If you have not headed to the theater yet, we recommend waiting for a resolution or utilizing e-ticketing which is not impacted.
— MoviePass (@MoviePass) July 27, 2018
In a Securities and Exchange Commission filing on Friday, Helios and Matheson disclosed that the service interruption had taken place because the company ran out of cash.
“The $5.0 million cash proceeds received from the Demand Note will be used by the Company to pay the Company’s merchant and fulfillment processors,” Helios and Matheson noted in the filing. “If the Company is unable to make required payments to its merchant and fulfillment processors, the merchant and fulfillment processors may cease processing payments for MoviePass, Inc. (‘MoviePass’), which would cause a MoviePass service interruption. Such a service interruption occurred on July 26, 2018.”
Helios and Matheson borrowed $6.2 million from Hudson Bay, including $5 million in cash, according to the filing.
Representatives for MoviePass did not immediately respond to a request for comment.
Wall Street is unimpressed with prospects for MoviePass as the stock of parent Helios and Matheson Analytics plunged on Wednesday following a reverse stock split.
Shares had been trading at well under a dollar in recent weeks, but with that split, shares of Helios opened at $14.23 on Wednesday, then declined steadily to close at $10.60 a share, then closed at $6.83 on Thursday. The issue lost half its value in mid-session trading on Friday, falling to $3.52.
The issue was trading above $38 last fall in the wake of launching its subscription service allowing customers to see a movie a day for a monthly fee of $9.99. But Wall Street has been losing faith in whether MoviePass can survive by selling data about its customers and striking marketing partnerships. The issue took a major hit after a May filing with the Securities and Exchange Commission revealed it had $15.5 million in available cash at the end of April, plus $27.9 million on deposit with merchants while monthly expenses totaled $21.7 million.
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