Shares of Helios and Matheson Analytics (NASDAQOTH:HMNY), the rollercoaster of a stock that happens to own MoviePass, surged another 11% in early trading Friday. They're only still up 3.4% as of 1:35 PM EDT -- but why did MoviePass go up so much in the first place?
For the answer, turn your TV to Fox.
This morning, MoviePass CEO Ted Farnsworth went on Fox Business to answer questions about the recent departure of a Helios board member, to discuss the state of the company's finances -- and to explain why MoviePass still has a future.
You won't be surprised to hear that Farnsworth is optimistic, but what might surprise you is why. MoviePass, you see, has caught a lot of criticism lately for restricting the ability of its members to see movies (which is, after all, the purpose of MoviePass). But while these changes have proven unpopular with MoviePass subscribers, they may turn out to be good news for Helios shareholders.
Thanks to restricting MoviePass members to seeing no more than three movies a month, restricting the selection of movies that can be seen, and limiting the showtimes available, Farnsworth says Helios is now "in the best position we've been in in awhile."
"We already have reversed course," says the CEO. By making it so hard for members to see movies that customers are now only able to access about "0.9 movies per month for the last 30-plus days," the company has reached a point where "we're ... actually at a breakeven now."
Assuming that's true, and MoviePass's cash burn rate has been ratcheted back from inferno status to something more resembling a slow smolder, it's possible that MoviePass is now in a position to begin loosening its restrictions and growing its user base again.
Indeed, according to Farnsworth: "We're not done changing the plans of giving the consumers better options."
While the prospect of even more changes to MoviePass's terms and conditions might send shivers up the spines of its customers, the prospect of MoviePass turning profitable, and maybe even growing again, seems to be giving investors the warm fuzzies today.