The owner of MoviePass plunges after proposing a reverse-stock split to avoid being kicked out of the Nasdaq
MoviePass owner Helios & Matheson plunged to a new low after proposing a reverse-stock split.
The move could help the company maintain Nasdaq's minimum $1 share price and avoid delisting.
"The failure of stockholders to approve this Proposal 3 could have serious adverse effects on the Company and its stockholders," the company said in a regulatory filing.
Shares of Helios & Matheson, the parent company of the MoviePass subscription service, fell more than 30% to an all-time low of $0.29 early Wednesday after announcing a reverse-stock split that could save it from being delisted by the Nasdaq stock exchange.
In a regulatory filing out Tuesday evening, the company announced a special shareholder meeting to convene in July in order to vote on four proposals to shore up the company's valuations to Nasdaq's standards.
According to Nasdaq's listing rules, a company must maintain a share price above $1.00 — a level HMNY's stock has not seen since May. The sell-off, a 98% plunge in just seven months from a record high of $32.90, has come as Wall Street remains concerned about the company's financial stability.
A reverse-stock split, like the one HMNY has proposed, could help shore up its share price above the minimum. The company wants to consolidate shares anywhere from 1-for-2 up to 1-for-250, which would raise individual share prices by whichever multiple the company eventually chooses.
"The failure of stockholders to approve this Proposal 3 could have serious adverse effects on the Company and its stockholders," HMNY said in the proposal.
Besides the stock split, investors will also be voting to approve new financing notes from January, a share increase, and to change the minimum number of shareholders required to form a quorum.
Despite hemorrhaging cash and racking up a deficit of $150 million on to its latest SEC filing, HMNY maintains that a $300 million "equity line of credit" can sustain it for at least a year — something analysts aren't convinced of quite yet.
There are also worries of encroaching competition from other subscription services. AMC plans to offer its own product that allows moviegoers to see three screenings per week for $20 every month. It will launch June 26.
Last week, the company said MoviePass had reached the 3 million subscriber milestone, and was now accounting for roughly 5% of all movie tickets soon.
Do you have information about MoviePass or other competing subscription services? Get in touch with this reporter here.
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