MoviePass, which revolutionized the movie-going cult in the US, has two bad news pieces mainly. The parent company of MoviePass, Helios and Matheson Analytics, announced the quarterly report, which shows one massive operating loss of $126.6 Million. The company made this move after a group of shareholders filed a class action lawsuit against MoviePass. The lawsuit accused MoviePass of misleading the shareholders into believing in an impractical profit system. The shareholders are also demanding some compensation from the company in light of the 99% share-value decrease in the last 30 days. In response, the parent firm had a pathetic quarterly report to produce.
It does not come as a surprise that MoviePass has been facing operational loss for quite some time. The idea of offering a movie ticket every day by charging just $10 a month had taken even the customers by surprise. Now, after all these time of functioning, the company has not been able to control the loss of money it faces in the long run. It should be noted that, although losses were there, the amount was not that higher the last year. In fact, in the same quarter of the previous year, MoviePass had to face a loss of $2.7 Million.
However, what provoked the lawsuit was the unbelievable decrease in the share-value. A month before, a single share of MoviePass was priced at $45, but, right now, it has come down to a nickel. Shareholders see this as something quite incredible and misleading. The lawsuit argues that the company misled them into purchasing shares of a product that the owners themselves knew would not work out. Shareholders who are part of the lawsuit also claim that the company produced no proof whether the MoviePass business model would materialize into something profitable. They also believe that the lawsuit is something inevitable.