INSUBCONTINENT EXCLUSIVE:
today as investors continued to flee the cash-burning movie service
That drop followed a 31 percent dive yesterday, after the company filed a statement with the SEC warning that it would have to sell equity
in the coming weeks for it to remain solvent
35-40% by the implementations and abuse prevention measures we have put in place over the last few weeks
We have always known, from when MoviePass took off in August, that it was going to be a high cash burn business model
according to our business model
We have access in capital markets to over $300 million
them incredulous), there is an enormous challenge of converting that money into equity now
The envelope math looks like this: A month ago when the stock closed at $4.21, buying 20 percent of the company would have cost roughly $55
the stock price so low, getting cash on the balance sheet today is a much harder proposition
That same $55 million that bought an investor a fifth of the company last month would be a complete buyout today
companyThe obvious option is to radically control burn
The company could offer pricier tiers for heavy users of MoviePass, and could put a ceiling on the number of films a customer can watch per
month as it did temporarily a few weeks ago
Lowe seems deeply committed to overall subscriber growth though, and that makes any sort of constraints on the product unlikely
The reason is that subscribers are the leverage Lowe needs to negotiate better partnership arrangements with theater chains, so he has to
keep trying to grow users rapidly.One theory is that the company could be negotiating equity deals with theater chains like AMC, which
both have since sold off large percentages of their holdings
That could be an enticing proposition for the chains, since they could realize an almost immediate gain on their investment, plus the
ongoing proceeds of a partnership going forward.The other tactic would be to sign up more MoviePass subscribers who watch limited films
The challenge, beyond the incredibly short time period to try to build that marketing funnel, is that MoviePass appears to lose money on the
very first ticket a customer purchases
the company will either hit the ground in the next few weeks, or it will right the ship, limit expenses and get enough equity investors to
give it some cash to burn and keep on growing
