MoviePass is a hit, but it's not been enough to save the shares of majority stakeholder Helios and Matheson (NASDAQOTH:HMNY) these days. Helios and Matheson took another big hit last week, and that was after announcing that MoviePass had grown its subscriber base to 600,000 members, up from just 20,000 accounts just two months earlier. To be fair, the platform's overnight success may also be seen as a potential pitfall, given the model's near-term drain on capital.  

The data-analytics company that announced plans to snap up a nearly 54% stake in MoviePass this summer plunged 34% last week, and that follows a 20% drop the week before. Tuesday's big subscriber announcement was enough to send the stock 26% higher at Tuesday's open, but it wound up closing lower for the day. Helios and Matheson has been a portrait of volatility since mid-August, and lately it's been painful for those long the stock. 

MoviePass announcement for the $9.95 a month plan.

Image source: MoviePass.

At the movies 

Helios and Matheson announced on Tuesday that MoviePass had 600,000 paying subscribers as of Oct. 18, up from 400,000 a month earlier and just 20,000 the day before slashing its monthly rate from roughly $30 to $9.95. MoviePass lets members see any standard screening of a movie -- up to one per day -- at any theater that accepts debit card payments. MoviePass pays most theaters face value for the tickets purchased, so it stands to lose a lot of money on anyone seeing more than a single movie a month. 

There was an online rumor that MoviePass had topped a million subscribers earlier this month, but like most internet chatter, it proved to be bogus. The platform's a hit, and MoviePass now expects to acquire at least 3.1 million additional paying subscribers by Aug. 18, 2018. It was previously targeting 2.5 million accounts by next summer's anniversary of the great rate cut. 

Helios and Matheson also revealed that monthly churn had fallen from 4.2% for the first month following its mid-August price cut to 2.4% the following month. With monthly subscriber retention rate north of 86% and the average paying monthly subscriber life expectancy now at 46.8 months, MoviePass had better hope that Helios and Matheson can live up to its promise that it can run this business as a loss leader if it mines the data for new revenue streams.  

Right now, the math just doesn't make sense at $9.95 a month. The model seems to be as crazy as its stock chart, which, for those plotting along at home, saw the stock go from $2.42 in mid-October to $38.86 at its Oct. 11 peak to now $10.74 as of Friday's close. 

"When you apply computer science and machine learning to an industry that we believe has lacked significant innovation, useful patterns start to emerge," Helios and Matheson CEO Ted Farnsworth says in last week's press release. "More subscribers mean more data."

This all sounds good on paper, but it's easy to remain skeptical about how a few multiplex-consuming data points from the perspective of a penny-pinching millennial can ever deliver enough usable research to justify treating someone to several nights at the movies every passing month.