Is MoviePass too good to be true?
It’s getting more believable… because MoviePass just introduced ‘surge pricing’ on Thursday. What is surge pricing you ask? Well, surge pricing is triggered whenever demand for a given movie or showtime gets too high. At that point, MoviePass will ask you to kick in a few extra bucks ($2-$6) on top of the $10 monthly fee.
Wall Street thinks it’s too good to be true… because the monthly subscription fee is so low, the company loses money when subscribers use their pass even once. They are losing money – and fast. How fast? Try $40 million in the month of May fast. That amount is anything but chump change given that MoviePass was left with $18.5 million in cash and $30.3 million in accounts receivable that month.
It’s still a good deal… and the company is looking to add about two million more subscribers by the New Year. They also are looking to sell $1.2 billion in stock and debt securities to raise more money to keep this thing going. So stay tuned to see if the ‘thriller’ that is MoviePass can pull off a big screen worthy happy ending.