Helios and Matheson Analytics (HMNY), the parent company of movie subscription service MoviePass, has been booted off the NASDAQ, reports Business Insider. The company had fallen below NASDAQ’s standards of trading below $1 per share since July. Their value is so low right now, they are worth less than $0.01 per share as of 4 p.m. EST yesterday. That’s quite a fall from grace a year ago from when HMNY’s stock price was valued at $1,270.00 per share on February 26, 2018.
HMNY received a warning letter from NASDAQ in December that the delisting was likely to happen. HMNY appealed the decision and appeared before a panel on January 31. However, on February 11, the panel decided to delist HMN from the NASDAQ. HMNY can now, however, trade in the over-the-counter (OTC) markets, effective February 13.
Bloomberg reports that, in a statement, a spokesperson for HMNY said the delisting of the company would have “no effect on the day-to-day business operations of HMNY or its subsidiaries, including MoviePass and MoviePass Films.”
This news comes just weeks after HMNY announced that it would spin off MoviePass to be a wholly-owned subsidiary of HMNY. The new company, called MoviePass Entertainment Holdings, Inc., would trade on the NASDAQ, assuming it receives approval from the Securities and Exchange Commission. Neither of these actions should come as a surprise. MoviePass has been plagued with problems for quite some time including everything from technology issues to failing to find the right pricing model.
Among MoviePass’s bigger problems is being sued by shareholders in a Manhattan federal court for failing to be transparent about its financial sustainability and the viability of its business model, reports Bloomberg. This includes its subscription model which has changed numerous times.
In related news, last month, two MoviePass subscribers filed a class action lawsuit, stating that MoviePass used a “deceptive and unfair bait and switch scheme,” reports Variety. According to the class action suit, MoviePass convinced subscribers to enroll in the movie subscription service under one agreement and plan before changing the business model, dramatically limiting the number of movies they could see.
The plaintiffs, Lawrence and Laurie Weinberger of New Jersey said they bought annual subscriptions with the understanding they could see up to one movie per day in any theater at any time. The company’s business model and pricing has changed multiple times in the last year. Variety reports that another class action suit was filed in San Francisco, accusing MoviePass of blacking out certain movies at certain times.
The current MoviePass subscription plans offer three options: Select, All Access and Red Carpet. Each plan is priced based on zip code, and subscribers are limited to three movies per month.
For example, if you live in Boston, you can subscribe to the Select plan for $9.95 a month, All Access for $14.95 a month or the Red Carpet plan for $19.95. In the Seattle market, however, prices for each plan go up $2 per month.
As we said last month, MoviePass is in trouble, and it will take a lot of work to regain the trust of both shareholders and subscribers. The company’s lack of transparency and full disclosures have really hurt them, driving away potential investors and subscribers. With competitors like AMC Theatres and Sinemia, why would a subscriber take a chance on a service they can’t trust when other viable alternatives exist? The same could be said of investors. Unless penny stocks are their claim to fame, why would they invest in HMNY or MoviePass Entertainment – if it gets listed – when the companies’ track records speak for themselves.