Helios and Matheson Analytics Inc (NASDAQ: HMNY) is headed up in the pre-market this morning. If you do some digging, you’ll see that the company has not released any news as of late that would suggest that gains were on the way. So, what’s going on? Today, we’ll talk about:
- Why the stock is headed up;
- why you shouldn’t be fooled by the gains;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Why HMNY Is Headed Up
As mentioned above, Helios and Matheson Analytics is having an incredibly strong start to the trading session this morning. However, if you dig around, you’ll see that the company hasn’t released any news. So, why is the stock headed up? Well, it’s just traders trading!
Recently, HMNY was hammered in the market after announcing that it would be moving forward with a private placement that would drive around $164 million into the company. Of course, the transaction led to an incredible amount of dilution, upsetting investors and sending the stock on a run for the bottom. Nonetheless, some believe that the declines were exaggerated. So, they’re buying in hoping that the stock will move higher.
Don’t Be Fooled By The Gains
We know that when a stock edges upward, it may be hard not to consider investing. However, when it comes to HMNY, we’re looking at nothing more than fool’s gold. The reality is that the company is headed to zero because of a few bad moves and an unwillingness to correct the issue. So, what’s the issue?
Back in August of last year, Helios and Matheson Analytics acquired a majority stake in MoviePass, reducing the price of the unlimited movie theater experience to just $9.95 per month. Subscribership flew upon the price reduction, and while that looked like good news, it was actually a very bad thing.
You see, HMNY and MoviePass pay full price for each movie ticket used by their subscribers. That means that each subscriber that goes to the movie theater more than once generates a loss for the company. As a result, the company has moved forward with multiple offerings, diluting shares in an attempt to raise money to further support the losing service that is MoviePass.
Throughout the process, the company has explained that it knows it’s not going to make money on subscription fees. Instead, it intends to turn a profit through marketing, data sales and more. However, none of that has worked. So, the company has been reaching for straws to keep investors engaged, acquiring two companies and only expanding losses in the process.
At the end of the day, HMNY is a struggling company that’s only likely to see further struggles. Without increasing the price of MoviePass to something more realistic, the company isn’t likely to ever generate a profit. However, if the price of MoviePass is increased to a point where profits can be made, the company will likely lose a big percentage of its subscribership. So, HMNY is in the midst of a damned if you do, damned if you don’t situation, and it’s investors will also be damned either way!
What We’re Seeing From The Stock
Regardless of the fact that the writing is on the wall here, investors are sending Helios and Matheson up in the market this morning. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (8:00), HMNY is trading at $0.26 per share after a gain of $0.03 per share or 12.99% 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 continued work to turn a profit. While we don’t believe that the company will make it this far, anything can happen in the market. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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