(Bloomberg) -- Shares in the owner of MoviePass Inc. fell to their lowest level in nearly a decade, pummeled by fears that the $9.95-a-month movie subscription service is doomed.
Helios & Matheson Analytics Inc., the data-tracking firm that backs MoviePass, declined 22 percent to 61 cents. The swoon marked the stock’s 11th straight drop and brought it to a level last seen when the financial crisis was raging in December 2008.
Concerns about MoviePass deepened this week after Helios & Matheson revealed that it’s running out of cash. Another potential source of pressure on the stock: The company may be relying on an at-the-market share program to raise funds, according to Maxim Group LLC analyst Nehal Chokshi. That approach would further dilute the shares.
MoviePass needs to find a way to make its business sustainable, but the solution may not be popular with its customers. Right now, subscribers pay less than $10 a month and get to see a new movie in the theater every day. MoviePass may have to limit the program to three movies a month if it wants to get back on track, Chokshi said.
“It is not the only way to demonstrate a sustainable subscriber business model, but it is the easiest to sell to investors,” said the analyst, who has a buy recommendation on the stock.
Helios & Matheson said earlier this week that it had just $15.5 million in cash at the end of April. The firm has been going through about $21.7 million a month, suggesting that it’s running out of time. But Chief Executive Officer Ted Farnsworth said the company can raise more money by selling stock or borrowing the cash.
Helios & Matheson is probably already relying on its at-the-market vehicle, which lets companies sell stock at market prices, according to Brian Kinstlinger, an analyst at Alliance Global Partners. Helios & Matheson didn’t immediately respond to a request for comment on Thursday.
MoviePass is taking other steps to stem losses. It has prevented multiple viewings of the same movie and made it harder to share memberships. However, with a new “Star Wars” movie due out May 25, usage could ramp up again, Kinstlinger said in a note. The analyst cut his price target to $5 from $12 on Wednesday.
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