Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having a rough day in the market today, following up on the recent declines that we’ve seen on the stock. The declines today seem to be the result of an announcement that the company has acquired an even larger stake in MoviePass, an overwhelmingly popular, but ridiculously unprofitable service. Today, we’ll talk about the news, what we’re seeing from the stock, why the news is leading to declines, and what we’ll be watching for with regard to HMNY ahead.
HMNY Announces Acquisition Of More MoviePass
As mentioned above, Helios and Matheson Analytics is having a rough day int he market today after announcing that it has acquired a larger percentage of MoviePass. In a press release issued today, the company announced that as of February 15, 2018, the total ownership the company has in MoviePass common stock (excluding shares underlying MoviePass options and warrants) is equal to about 78%.
In the release, HMNY said that the increase in ownership is the result of cash advances provided to MoviePass by the company periodically. These cash advances were provided from December 19, 2017 through February 15, 2018. According to the release, the money offered was paid to help support working capital, operation requirements, and expansion of MoviePass and its business plans and objectives. The company said that it has invested $45,525,000 in this period. In a statement, Mitch Lowe, CEO at MoviePass, had the following to offer:
Helios’ capital investment has fueled our growth to approximately 2 million subscribers and enabled us to move closer to our vision of transforming the movie industry… Our goal has always been to drive more people to the movies, while reinvigorating the entire ecosystem that includes theaters, studios and distributors. Our relationship with Helios makes that possible.
The above statement was followed up by Ted Farnsworth, CEO of HMNY. Here’s what he had to offer:
We could not be more thrilled to hold a bigger stake in MoviePass, as the MoviePass phenomenon has become a major disruption to the entertainment industry… The partnership continues to be a great benefit to both MoviePass and Helios and Matheson shareholders.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In this particular case, the news proved to be viewed as negative among the investing community. After all, MoviePass has been struggling to generate a profit and Helios and Matheson has been footing the bill in an effort to use the service as a data mine. Nonetheless, as the service grows in profitability, losses from the service will continue to grow. With this press release, 2 things are clear. First and foremost, HMNY has not yet made MoviePass profitable, and the company is likely going to foot the bill ahead. As a result, it’s no surprise to see declines in the market today. Currently (12:04), HMNY is trading at $4.70 per share after a loss of $0.36 per share or 7.21% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on HMNY. In particular, we’re interested in following the story surrounding the company’s plans with MoviePass. Ultimately, they will need to start taking advantage of the data they are mining to turn a profit quickly. If this doesn’t take place, shares are likely to continue sliding. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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