Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having an incredibly strong start to the trading session this morning after the company announced that MoviePass has entered into an agreement with Postmates. With added beneftis to subscribers, the news excited investors, sending the stock screaming for the top. Today, we’ll talk about:
- The update;
- why HMNY is still a very risky stock;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
HMNY Announces Postmates Partnership
As mentioned above, Helios and Matheson Analytics is having an incredibly strong start to the trading session this morning as news breaks surrounding a new partnership. According to a press release issued early this morning, MoviePass has partnered with Postmates, providing further benefits to its members. These benefits will include special discounts and credits toward both services through promotions within the MoviePass application.
Under the terms of the agreement, HMNY and MoviePass will work to promote Postmates within their apps and other media in exchange for the delivery credits, long free-trial periods, and other perks. Postmates is a company that proivdes delivery of anything on demand. In a statement, Mitch Lowe, CEO at MoviePass, had the following to offer:
We are delighted to partner with Postmates, a Silicon Valley company using great technology to bring great products to everyone’s door. Working with Postmates allows us to continue demonstrating the monetization of our database in creative ways, still placing the utmost value on the privacy of our subscribers… As part of our ongoing commitment to continually enhance the value of the MoviePass subscription for our subscribers and knowing that the vast majority of our subscribers generally have at least one streaming subscription at home, it was a no-brainer to bring them real value not just at the movies but on the comfort of their couches through our relationship with our friends at Postmates.
The above statement was followed up by Ted Farnsworth, Chairman and CEO at HMNY. Here’s what he had to offer:
The large MoviePass member base has created revenue sharing opportunities for us to partner with companies like Postmates – which we plan to use to benefit our MoviePass members… Our vision is that for just $9.95 each month – MoviePass members can not only see 3 movies in theaters, and additional movies at a discount, but also become members of a ‘club’ who are rewarded through discounts on services with MoviePass partnerships – increasing the value of that $9.95 monthly membership. We believe the Postmates partnership opens up an additional revenue stream for MoviePass and is a step further towards diversifying our sources of revenue.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to invest is that the news moves the market. In the case of HMNY, the news proved to be positive. After all, more subscribers means more revenue, and better perks will bring the subscribers in. So, it comes as no surprise that the stock is making a run for the top. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:50), HMNY is trading at $0.022 per share after a gain of $0.0028 per share or 14.51% thus far today.
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Be Careful With HMNY
While the news today will likely make subscribers happy, it’s not a solution to the problem that Helios and Matheson is facing. The company pays full price for movie tickets. That’s the problem! With a service that costs $9.95 per month and non-subscriber revenue at about $2 per month per subscriber, and the average movie ticket in the United States costing around $8.97. While MoviePass hasn’t announced utilization rates among subscribers, considering a 2 movie per month utilization rate, the company loses around $6 per month per subscriber. Even at a more modest utilization rate that has been circulating the space at 1.53 movies per user per month, the company is still losing around a buck and a half per subscriber per month. These losses simply can’t be sustained.
In the past, Helios and Matheson Analytics has shown us that their favorite way to get out of a financial pickle is dillution. In fact, like DryShips, Top Ships, and others, the company has greatly diluted shares, leading to massive reductions in value. So, if you’re considering HMNY as an investment on this news, you may want to reconsider.
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 the actual utilization rate of MoviePass. While this data isn’t available at the moment, it will tell us a lot about how long the company will be able to last in its current state. So, we’ll be looking for any insinuation surrounding utilization rate. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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