NEW YORK (Reuters) – The parent of the controversial movie program, MoviePass, announced on Tuesday that it will seek to cut losses by 50 percent over the next 30 days while limiting subscribers' opportunities to watch movies during their first two weeks in theaters.
MoviePass, a US movie ticket subscription app, can be seen on a mobile phone in this photo in New York, USA, May 1
Portions of MoviePass's mother Helios and Matheson Analytics Inc ( HMNY.O ) had dropped 36 percent at noon in the seesaw trade, and shares rose briefly by more than 150 percent. AMC Entertainment Holdings ( AMC.N ), the largest US movie chain to offer a competitive ticket service, gained 7.5 percent in midday trading.
"We believe that the measures we introduced last week will immediately reduce cash usage by 60 percent and continue to generate lower funding requirements in the future," said Chief Executive Officer Ted Farnsworth in a statement.
The company's stock fell 96 percent last week after it was unable to make the necessary payments to its merchant and fulfillment processors. Due to service interruptions, the 3 million customers could no longer receive movie tickets.
The company, which claims to account for approximately 6 percent of US cash receipts, is one of the few companies that has made the breakthrough in the growth phase. [L1N1SA1SY] This has increased investor attention and made the stock price more volatile.
Farnsworth stated in his statement that the company "has challenged a firmly rooted industry while preserving the financially transparent records of a listed company."
Michael Pachter, an analyst with Wedbush Securities, said the price increase and service cuts could have hurt MoviePass as a competitor in the market. He noted that the price hike from $ 9.95 to $ 14.95 lowers the price to just $ 5 below the $ 19.95 subscription offered by AMC.
At the same time, the AMC service, called A-List, includes IMAX and 3D movies and allows subscribers to watch up to three movies a week, he added.
"If you raise the price and keep people waiting, you (MoviePass) can break even, but the question is how many of them will stay if you can spend five dollars more on an IMAX show on the Opening night goes, "said Tenant said. "I guess they're going to lose a lot of customers, and maybe survive."
David Randall's coverage; Editing by Jennifer Ablan and David Gregorio