Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having a relatively strong start in the pre-market hours this morning. This follows the drastic declines that we saw in the value of the stock yesterday following the announcement of an offering. With the stock headed up, many are asking if now is the time to buy. Today, we’ll talk about the bearish view surrounding the stock, the bullish view, what we’re seeing from HMNY today, and what we’ll be watching for ahead.
The Bearish Argument Surrounding HMNY
Ultimately, when it comes to Helios and Matheson Analytics, thee are strong arguments on both the bearish and the bullish sides of the coin. On the bearish side of the coin, there’s an argument that there is no room left for profit at the current price of MoviePass. After all, MoviePass only costs $9.99 per month, essentially the price of an average movie ticket. So, subscribers that go to the movies more than once in a month lead to a loss.
The idea here is that, as MoviePass grows, the losses associated with the product are likely to continue to do the same. As a result, HMNY will be forced to raise funds to keep the service alive, but will never even break even on it.
The Bullish Argument
While the bearish argument is a valid one, it’s hard to argue that the bulls don’t have a valid argument as well. At the end of the day, the bullish argument is indeed a strong one. You see, the bulls understand that at subscriber prices, there is a potential for loss. However, they also point to the fact that subscriber revenue isn’t the only revenue we can expect to see from the MoviePass service.
In fact, HMNY recently announced that it has entered into an advertising agreement surrounding a specific movie title. The idea here is that MoviePass will make consumers want to go to the movies more, lifting box office numbers. Of course, with this agreement comes another line of revenue surrounding the MoviePass product.
The bulls ultimately argue that the revenue generated through the MoviePass product will extend far beyond subscriber fees. With marketing revenues as well as the sale of data, the bulls believe that HMNY will have no problem generating profits from the product in the long run.
What We’re Seeing From The Stock
As mentioned above, Helios and Matheson Analytics is having a relatively strong start to the trading session in the pre-market hours this morning. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (9:23), HMNY is trading at $6.99 per share after a gain of $0.20 per share (2.95%) 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 MoviePass. In fact, just yesterday, the company announced an offering with the goal of raising funds to purchase a larger share of the product. We’ll be watching for more marketing agreements, data sales agreements, and gains in subscribers. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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