Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having an incredibly strong day in the market today. This comes after declines late last week following a short-side report from Citron. So, what is it that’s making the stock climb today? It’s simple, the value of MoviePass is starting to become more and more clear. Before we get into the details, we’d like to thank our partners at Trade Ideas for being the first to alert us to the gains on the stock. Currently (9:39), HMNY is trading at $22.10 per share after a gain of $1.70 per share (8.33%) thus far today.
The Back Story On HMNY
Before MoviePass, Helios and Matheson’s claim to fame was RedZone Maps. The big data company used its AI to create a mapping application that shows users where crime is high in different zones around the world. However, most recently, the story has surrounded the product known as MoviePass.
Back in August, HMNY acquired a majority stake in the MoviePass service – a service that allows users to go to the movie theater as much as they would like for one low monthly fee. After reducing that fee from around $40 per month to just $9.95 per month, the subscriptions for the service skyrocketed. In fact, the company announced just a month after the acquisition that subscriptions had climbed from around 20,000 to more than 400,000. Of course, this led to a dramatic increase in value, causing the stock to climb in multiples rather than percentages.
Cue The Short Report From Citron
After the stock went on a dramatic climb, Citron released a short side report on HMNY. Essentially, Citron said that MoviePass isn’t worth the billion dollar valuation that investors saw it to be worth. One of the big issues that Citron pointed out was that it may be hard to turn a profit from the service at just $9.95 per month. Of course, this led to massive declines in the value of the stock, as Citron is known for driving fear into the minds of investors.
The Real Value Of MoviePass Isn’t In The Monthly Fee
While Citron’s short-side views sent Helios and Matheson Analytics on a tear downward late last week, the stock is having a great day in the market today as investors realize that the monthly fee isn’t the true value of MoviePass. Sure, the fee will generate instant revenue, and that’s a great thing, but the real value of MoviePass lies in the data, not in the monthly service fee. The real value of MoviePass lies in the data the company generates through subscriptions.
Think about it, today’s age is the age of big data. That’s why the cloud was born and that’s why companies like Google, Facebook, Apple and more are spending massive amounts of money on data mining. At the end of the day, big data is big money, and HMNY recognizes that.
So, what do they plan on doing with the data? They plan on selling it. HMNY recently announced that the key was to sell the data that they collect to companies like Uber, various different eateries, and more. Of course, learning more about the customers these companies want to sell their products and services to is key to growth. As a result, there is a strong demand for the data that Helios and Matheson Analytics will collect through MoviePass.
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The Bottom Line
The bottom line here is that, regardless of what Citron and other short sellers have to say about HMNY, the company has found itself as the majority owner of a key product. MoviePass is going to generate a massive amount of money in monthly fees as demand continues to skyrocket. However, these monthly fees aren’t where the true value is. The data collected by the company through the sale of MoviePass may be worth billions in the future, and that is the real value proposition. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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