MoviePass Owner’s Shares Fall More Than 40 Percent After New Public Offering Announcement

Helios & Matheson is trying to raise money to fuel MoviePass’s growth

Shares of MoviePass parent company Helios & Matheson Analytics fell more than 40 percent during trading hours on Thursday after the company announced a new public offering.

The Thursday drop erased gains the company had enjoyed earlier in the week when shares were up more than 36 percent over the course of five days.

Helios & Matheson shares are now down more than 27 percent in the last five days and down more than 63 percent in the year to date.

The company, which owns 92 percent of MoviePass, said in a news release it will sell 10.5 million “Series A-2 units” for $2.75 per unit, each of which consists of common stock and a warrant to buy additional common shares.

While Helios & Matheson is attempting to raise money to fuel growth and sustainability at MoviePass, but for current investors, the public offering dilutes their holdings.

“[Helios & Matheson] may use the net proceeds from this offering to increase the Company’s ownership stake in MoviePass or to support the operations of MoviePass and MoviePass Ventures; to satisfy a portion or all of any amounts payable in connection with previously issued convertible notes; and for general corporate purposes and transaction expenses,” the company said in a release announcing the offering. Helios & Matheson may also use the proceeds to make other acquisitions.

Earlier this week, Helios & Matheson revealed in a filing with the Securities and Exchange Commission that it lost $150 million in 2017 due mainly to its acquisition of MoviePass, which the company is shifting its focus to.

An independent auditor for the company said there was “substantial doubt” about the future and sustainability of MoviePass.