Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having yet another incredible day in the market today. However, if history is any indication, soon enough, the stock will fall back from its gains, taking those who jumped in with the hope of profits for a ride toward the bottom. Today, we’ll talk about:
- What HMNY is;
- why the stock is such a BAD investment;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
What Is HMNY
Helios and Matheson Analytics started as a data analytics company. However, in August of last year, the company acquired a majority stake in a service known as MoviePass, breaking into the entertainment industry. MoviePass is a service that allows subscribers to go to the movies on an unlimited basis for only $9.95 per month.
With the popularity of the MoviePass product, HMNY recently spun off its old flagship product, Red Zone Maps. However, we believe that this was a bad move as Red Zone Maps was the only product that the company had that had any potential of generating profits, which brings us to:
Why The Stock Is A Seriously Bad Investment
After the acquisition of the majority stake in MoviePass, HMNY reduced the price of the service greatly to get subscriber growth rolling, and it worked. The company has seen massive subscriber growth in their MoviePass service since they got involved. However, while that sounds like a good thing, it’s really very bad.
The truth of the matter is that based on the structure of the MoviePass service, new subscribers only cause growth in losses. That’s because Helios and Matheson Analytics foots the bill for movie tickets used by its subscribers, and pays full price in doing so. With a subscription fee of only $9.95 per month, any time a subscriber goes to the movie theater more than once per month, that subscriber generates a loss, and these losses have been mounting.
In fact, since the acquisition of the majority stake in MoviePass, HMNY has been hemorhaging money, losing more than $20 million per month. This has led to offering after offering, only diluting shares that are out there and promising more dilution to come. At the end of the day, the company has taken a service that was relatively small and killed any potential of it generating a profit in order to show growth in subscribers. Now, if prices were to go up, the company would probably lose the vast majority of subscribers. However, if prices stay the same, the company is likely to find its way to bankruptcy. Ultimately, HMNY has worked itself into a damned if you do, damned if you don’t situation.
What We’re Seeing From The Stock
While there are plenty of reasons to be concerned about Helios and Matheson Analytics, the price is very low at the moment, and traders are seeing this as an opportunity for some quick gains. So, we’re seeing strong movement in the value of the stock today that in my opinion, is opening the door to potential profits for short sellers. Nonetheless, our partners at Trade Ideas were the first to alert us to today’s gains. Currently (9:50), HMNY is trading at $0.20 per share after a gain of $0.016 per share or 8.91% 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 counting the days to the next offering as the company continues to reach for straws in an attempt to keep the sinking ship afloat. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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