Helios and Matheson Analytics Inc (NASDAQ: HMNY) is in the midst of a massive slump in value. In fact, the stock is currently trading at the lowest price it ever has. However, with prices so low, many are starting to wonder if now is the time to get involved. Well, I’m here to tell you my friends, the stock is trading at record lows for a very good reason. Today, we’ll talk about:
- Why HMNY is trading at record lows;
- what we’re seeing from the stock;
- and what we’ll be watching for ahead.
Why HMNY Is Trading At Record Lows
When it comes to Helios and Matheson Analytics, the big story surrounds their majority-owned subsidiary, MoviePass. Before MoviePass, the company was known for the creation of RedZone Maps, a crime mapping application. However, when the news broke that the company not only acquired MoviePass, but reduced the price of the service from around $50 per month to under $10 per month, the stock flew. Further gains made themselves apparent as subscribership grew dramatically, with prices reaching an all time high of $32.90 per share by October 11th. However, everything started to fall apart from there.
You see, while MoviePass was seeing exceptional growth, it took on massive losses in the process, losses that HMNY has been covering at the detriment of its investors. The reality is that there’s a good reason subscriber growth is so strong, and it’s not because MoviePass is a great, profitable product. The reason is that going to the movies in the United States costs just about as much money as a monthly subscription fee at MoviePass. While the company pays full price for most movie tickets, subscribers only pay the monthly fee, which is generating the massive losses. Nonetheless, subscribership continues to grow. Of course, that makes sense. If I had a bag of cash and said “Put $9.95 into this bag every month, and I’ll buy all of your movie tickets for you for the next 30 days.” chances are that you’d put some money in the bag. The only problem is that no matter how many people did the same, there wouldn’t be enough money to cover movie tickets for everyone! Essentially, the company is doing nothing more than giving away cash.
Unfortunately, this has impacted the financials at HMNY in a big way. In fact, since the acquisition of the majority stake in MoviePass, the company has had to process multiple offerings. During these offerings, the company said that the reason for raising funds was to cover the costs of MoviePass, acquire more of the company, and use the funds for general corporate purposes. Well, the more the company acquires, the larger the losses, and I doubt that anything is left for general corporate purposes as these losses take their place. With all of that said, if you see this record low price as a discount, think again, there will continue to be more room to fall until the stock reaches $0!
What We’re Seeing From The Stock
As investors continue to see that MoviePass isn’t going to be the goose that lays the golden eggs as they thought, we’re watching more and more abandonment of Helios and Matheson Analytics in the market. Ultimately, investors are seeing through the noise and focusing on the core data that shows that MoviePass is likely to never be profitable. So, it’s no surprise that declines are continuing today. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (8:46), HMNY is trading at $0.48 per share after a loss of $0.013 per share or 2.64% 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 finances to see just how much growth we see in losses as more and more consumers subscribe to MoviePass. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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