MoviePass, the subscription service that allows subscribers the opportunity to watch multiple Movies per month, is facing multiple lawsuits. Deadline reports that a lawsuit spearheaded by Jeffrey Braxton, shareholder, has been filed against MoviePass' parent company. The company has been losing money over the past several weeks.
The suit was filed against "Helios and Matheson executives CEO Ted Farnsworth and CFO Stuart Benson," according to The Wrap. The lawsuit comes after Helios and Matheson reported an operating loss of $126.6 million in the last quarter, and on Monday faced a massive loss, and ending up with a share price of 5 cents.
Shareholders filed suit after facing massive losses
Shareholders have alleged that they were misled about the MoviePass business model. According to the Suit, the business model was not sustainable and that it was just a matter of time before the company ran out of money.
Attorney Mark Levine has said that the business model was not sustained because there was no way to believe that the company could monetize the system in a way which would keep the service alive, without being buried in massive debt. Comicbook reports that according to the class-action lawsuit, that omissions and other comments made by Helios caused the damage incurred by shareholders.
Shareholders are not the only one being lied to
Investors are not the only ones alleging they were lied to about the current status of MoviePass. Subscribers have also faced issues with similar situations, including "peak pricing." Users were originally told they would only pay more high-demand movies. However, subscribers were faced with the reality of a $6 to $8 charge for most movies.
This caused a massive blackout when 'Mission Impossible - Fallout' premiered, and forced MoviePass to borrow money in order to survive.
A handful of users have filed complaints with the company, saying they were automatically re-subscribed after initially canceling their subscription. Other subscribers have struggled with closing their accounts, forcing them to continue their month-to-month plan.
The 'end of times' point for the subscription service came when Helios revealed that it could not make payments to merchants, causing their stock value to fall and lose 96% of their value. Braxton is hoping the lawsuit will make it possible for shareholders to recover some losses. MoviePass continues to fail day after day, leaving many wondering what will happen next.
