MoviePass Was Not a Good Business – Bloomberg

It is an unusual sort of securities fraud. The basic allegation is that Farnsworth and Lowe were constantly asked if MoviePass could make money with a $9.95 unlimited monthly subscription, and they constantly said “sure probably somehow,” and it never did. Which is all true. But also its financial statements were public, and more or less accurate. They never claimed that MoviePass did make money. They just claimed that maybe one day it somehow could make money, with some hand-waving about big data and artificial intelligence.

They were totally wrong, as it turns out, and prosecutors allege that they never believed it themselves. But it was the sort of thing that everyone was saying. They were just doing what they were supposed to do, selling a product below its marginal cost in order to get lots of subscribers quickly. It worked really well, and they got a lot of subscribers quickly and lost money on all of them, and then they went bankrupt. It was not a good idea. But it was kind of what the market demanded.

Meanwhile they were flailing around in private trying to figure out how they could make money….

Source: MoviePass Was Not a Good Business – Bloomberg