MoviePass was just hit with a class action lawsuit. As reported by Deadline, Helios and Matheson (HMNY), MoviesPass’s parent company’s shareholeds have grouped together and filed a lawsuit against the company for compensation, after it’s recent loss of a substantial amount of money in recent months. The suit was filed against Helios and Matheson, CEO Ted Farnsworth and their CFO Stuart Benson.
The lawsuit was passed after HMNY reported and operating loss of $126.6 million this past quarters.The Company closed monday at a terrifyingly low 40.05.
The suit was filed by Jeffrey Braxton, who is one of the company’s shareholder. The lawsuit was filed on Monday in New York, which spoke for many shareholders and investors who lost their money in the venture. Stockholders of the company feel misled and many of them believe that they were lied to about the business model of MoviePass.
“MoviePass’ business model was not sustainable because there was no reasonable basis to believe MoviePass could monetize the model to a degree that could be maintained before being too buried in debt to survive,”
Wrote attorney Mark Levine in the suit.
“False and misleading statements or material omissions…caused the damages suffered by [Braxton] and the other class members,”
The suit continues.
Although the stockholder and the investors are not the only ones’ who felt that way, the subscribers of the service have been experiencing the same situations too, which began with the failed “peak pricing” fiasco, where subscribers were told that they might have to pay more dollars for movies that were in ‘high demand’ but was quickly changed to a pricing scheme of $6 and $8 charges for almost every movie in the theaters. This resulted in a blackout of their app when Mission Impossible: Fallout came out and MoviePass needed to borrow money to survive.
Lately subscribers have also been complaining about how MoviePass has been re-subscribing them after they have cancelled their subscription. In some cases, users have been getting and ‘error’ message when trying to delete their accounts, which is keeping them from unsubscribing from month-to-month services.
How long do you think MoviePass will survive under these circumstances? Let us know in the comment below.