Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having a relatively strong start to the trading session this morning. However, the gains can be a bit deceiving. The truth of the matter is that the stock is looking to pick up some of what it left on the table after two days of dramatic declines. While things may look good today, now is not likely the time to get involved. Today, we’ll talk about:
- Why the gains aren’t worth getting in on;
- what we’re seeing from HMNY; and
- what we’ll be watching for ahead.
Be Very Careful If You’re Considering HMNY
With the relatively strong gains that we’re seeing in the value of the stock this morning, it only makes sense that many investors are wondering if now is the time to get involved in Helios and Matheson Analytics. Before we get into the details, it’s a good idea to go back to your chart and look at the five-day view. When you do, you’ll see that today’s gains are nothing more than a drop in the bucket when compared to the declines that we’ve seen over the past couple of sessions.
At the end of the day, these declines came for good reason. Recently, HMNY reported its earnings, leading to some real fear among investors. In the report, the company said that its monthly cash burn came to around $22 million. To make matters worse, at the close of the first quarter, the company only had around $15 million in cash on hand. Ultimately, the numbers show a company that’s quickly going broke!
The reason for the financial struggle is simple. Since acquiring a majority stake in MoviePass, HMNY has been burning through money covering the costs associated with the far-from-profitable service. In fact, each user that uses MoviePass as intended generates a loss for the company. While some believe that user data will lead to strong revenue through data sales and marketing initiatives, the current financial position of the company shows that this simply can’t come fast enough. At the end of the day, MoviePass is a business model that is failing quickly, and, due to their acquisition of the service, Helios and Matheson (along with their investors) are the ones left holding the bag.
What We’re Seeing From The Stock
After massive declines like what we’ve seen from HMNY over the past couple of sessions, it’s only natural to see the market correct slightly before more declines commence. That’s what’s likely happening today. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (9:02), HMNY is trading at $0.83 per share after a gain of $0.045 per share (5.71%) 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 seeing just how long the company can survive with the massive cash burn being generated through MoviePass. Nonetheless, we’ll be following the story closely and bringing the news to you as it breaks!
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