Helios and Matheson Analytics Inc (NASDAQ: HMNY) seems to be having a relatively strong day int he market today, with gains nearing 5% in the pre-market. However, expand that chart out to the 5 day view and you’ll see more of the picture. At the end of the day, I believe that what we’ve seen out of HMNY as of late is the beginning of the end. Today, w’ell talk about:
- What we’re seeing from the stock;
- why you shouldn’t let today’s gains fool you;
- and what we’ll be watching for ahead.
What We’re Seeing From HMNY
As mentioned above, Helios and Matheson Analytics is having a relatively strong start to the trading session this morning. While the company hasn’t released any news, the gains are still here. So, what’s the deal? Well, it seems as though what we’re seeing is a reaction by technical traders to the idea that the stock may have reached support (although, it’s likely to fall later). Nonetheless, our partners at Trade Ideas were the first to alert us to the gains. At the moment (8:36), HMNY is trading at $2.53 per share after a gain of $0.11 per share or 4.55% thus far today.
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Don’t Let These Gains Fool You
Nearly 5% gain in pre-market, not too shabby. In fact, with gains like this pre-market, many likely are considering getting involved. However, don’t let the gains fool you. As mentioned above, all you need to do is expand the chart a bit and you’ll see the massive declines that HMNY has been facing for some time now.
At the end of the day, Helios and Matheson hit he mainstream publications after news broke that the company purchased a majority stake in MoviePass. Things were going great. The company greatly reduced the price of the service, and subscribers were growing quickly, and still are. So, what’s the problem?
Well, the problem is that every subscriber that signs up for MoviePass generates a potential loss for the company. That’s because of how the service works. HMNY is currently selling MoviePass subscriptions for $6.95 per month. From there, subscribers can go to the movie theater all they want. However, each time they go, MoviePass is paying the full price of the movie ticket. As a result, the first time a subscriber goes to the movies each month, he or she is generating a loss for MoviePass.
This is why we’ve seen so many offerings out of HMNY over the past several months since the acquisition of the majority stake in MoviePass. At the end of the day, the service isn’t generating enough money to stay alive. So, when it’s time to foot the bill, HMNY covers their part and a large majority of MoviePass’ part, increasing their ownership in the service with each injection of funding. Unfortunately however, this means that the company has been using investor money to pay for stake in a service that is generating nothing more than massive losses.
While the company intends on selling data and marketing services, even this plan is flawed. At the end of the day, the company is going to have to make tens of millions of dollars per month in data sales and marketing to even break even. Sure, that’s a great long term goal, but for HMNY, it needs to happen now. They simply don’t have much time considering the massive losses they’re taking on.
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 to see if the company does pull a rabbit out of the hat and magically start producing enough revenue to come close to sustaining its business. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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