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Shares of popular MoviePass owner rally after pricing secondary offering

Meanwhile, CEO Ted Farnsworth says the timeline for profitability is by the end of this year, when MoviePass hits around five million subscribers
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Helios and Matheson stock shot up Friday

Shares of Helios and Matheson Analytics Inc (NASDAQ:HMNY), the parent company behind the popular MoviePass subscription service, rallied Friday after its secondary offering priced at US$0.18.  

According to theFly.com’s deal commentary Canaccord Genuity LLC is acting as sole book-running manager for the offering, while Palladium Capital Advisors LLC is acting as a financial advisor. The website did not provide the size of the offering, including details about when it would be completed.

The public offering comes after the company filed a shelf registration statement with the Securities and Exchange Commission on July 2 to raise US$1.2bn over three years.

“We recently filed a US$1.2bn shelf registration that we’re looking to use for MoviePass, MoviePass films, and M&A activity,” Helios and Matheson CEO Ted Farnsworth told Proactive Investors.

Helios and Matheson stock shot up 9.3% to US$0.20 in morning trade.

MoviePass' boss answers critics

Meanwhile, investors are sitting up and taking note after Helios and Matheson CEO Ted Farnsworth talked to CNNMoney about the state of the business, and his plan to make it profitable. 

When grilled on how he planned to bring the market’s flagging confidence back to the company, the CEO pointed to liquidity in the stock and “no shortage of institutions” willing to funnel money their way.

“I think that one thing Wall Street likes is there's liquidity in the stock. We've already announced that we are looking at different options of doing a reverse [stock split] and all these different things to recapitalize, restructure the company,” Farnsworth told CNNMoney.

“But there's no shortage of institutions willing to work with us to give us money, even as we're going through this right now, losing money. The institutions definitely understand the model. They understand where we're going. And I think that we've gotten there in record time.”

READ: MoviePass owner seeks stake in Emmett Furla Oasis Films, launch film production company

The CEO said Wall Street was used to seeing a model like MoviePass, similar to a Netflix Inc (NASDAQ:NFLX), where the company burns a significant amount of cash to get to profitability, but also to claim market share.

“The timeline [for profitability] really is by the end of this year, when you hit around five million subscribers, is what our model shows,” said Farnsworth.

It’s been a tremendous ride with big highs and lows for Helios & Matheson which was a sleepy data analytics company when it acquired MoviePass, a service with just 20,000 subscribers at the time. After slashing the MoviePass monthly fee to US$9.95 from up to US$50 a month, its subscriber base shot up, crossing the three million mark in June.

AMC has taken a leaf out of Helios & Matheson's playbook and is now offering an "AMC Stubs A-List" subscription for $20 a month, which is double the price of MoviePass. 

If big theater chains jump in with their own programs, will MoviePass lose its allure?

"Not at all, our numbers went up 23% when AMC announced it. We don’t see this plan as competition. AMC has a capped plan which costs double the price with a limited amount of movies at a limited number of theaters. Our MoviePass subscribers can see films at movie theaters around the country – including AMC," Farnsworth told Proactive Investors. 

Contact Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive

-- (Updates with quotes from interview with Helios & Matheson CEO) -- 

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