Helios and Matheson Analytics Inc (NASDAQ: HMNY) has been having a hard time in the market as of late. Today is no different, with the stock seeing declines yet again. We’ve covered this stock quite a bit over the past few months and for some time, we’ve been warning investors that the stock is going to ZERO! At the end of the day, our view has not changed. Today, we’ll talk about why we believe that if you own HMNY, chances are that your best bet is to cut your losses.
The Big Problem With HMNY
When it comes to Helios and Matheson Analytics, the company’s flagship product is one that it purchased a majority stake in nearly a year ago. That product is known as MoviePass, and it has excited investors quite a bit since the company took a majority stake. However, that product is also the reason that we believe that HMNY is headed for zero.
MoviePass is a service that gives paying subscribers an unlimited movie ticket. That’s right, they can go to the movie theater whenever they’d like. When the company purchased the majority stake in the service, they reduced the price for MoviePass greatly, leading to a flood of new subscribers and excitement among investors. However, this proved to be their first mistake.
The truth is that every time a MoviePass subscriber goes to the theater, the company pays full price for a ticket. With the subscription pricing at just $6.95 per month, that means that when a subscriber uses their service for the first time each month, they’re generating losses. While HMNY has made it clear that their goal is to use the data mined from the service to generate revenue through marketing and data sales, this hasn’t happened as of yet. In fact, at the moment, the company is burning through nearly $22 million every month as it continues to rack up the losses. To make matters worse, at the company’s most recent earnings report, it only had about $15 million in the bank, showing that it’s going broke quickly.
Next On The Docket
Considering the shape that Helios and Matheson is in, I feel relatively comfortable making an attempt at predicting the future here. First and foremost, we know that financially, the company is struggling in a big way. So, we’re likely to see an attempt to access funds. Given the current picture at HMNY, chances are that the company will attempt to access these funds through the public with yet another dilutive offering. That won’t bode well with investors, but it will buy the company some time.
From there, HMNY will likely race to try and generate a profit from marketing and data sales, but as we know, Rome wasn’t built in a day, and unfortunately, the company doesn’t have many days left to do something here. Therefore, we believe that while the company will keep reaching for straws to try and stay afloat, the reality is that there’s already nothing left and that the stock is going to fall to nothing!
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At the end of the day, we don’t like to see this happen. Ultimately, we want to see every company be successful and every investor enjoy the fruits of their funds. However, the world simply doesn’t work that way. The truth of the matter is that a broken business model will lead to losses and ultimately the demise of any company. That’s what we have with HMNY, a broken business model at best!
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