Helios and Matheson Analytics Inc (NASDAQ: HMNY) is soaring early on in the trading session this morning after announcing that it has decided to speed up its plan for profitability. While the stock is soaring, we fear that this is a too little too late situation. Today, we’ll talk about:
- The announcement by HMNY;
- why it’s too little too late;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
HMNY Announces Acceleration In Plan To Profitability
Helios and Matheson Analytics has been marred with losses that have led to public offerings and other dilutive moves. However, in a press release issued early this morning, the company announced the implementation of several measures that are designed to help the company reach profitability. In the release, HMNY said that through the new steps, it will be able to compress the timeline to profitability. These steps include:
- Price Increase – HMNY will be increasing the price of MoviePass subscriptions from $9.95 per month to $14.95 per month. The company said that it intends to do this in the next 30 days.
- First Run Movies – The company also said that first run movies that are opening on more than 1,000 screens will have limited availability during the first two weeks unless the company makes them available on a promotional basis.
- Abuse – The company also said that it plans on implementing additional tactics to prevent abuse of the service.
- Non-Subscription Revenue – The company also announced that it is generating non-subscription revenue of between $4 and $6 per subscriber as of Q3.
While there was more offered in the full release, the changes above are the changes that we haven’t heard about time and time again in the past. In a statement, Ted Farnsworth, Chairman and CEO at HMNY, had the following to offer:
Over the past year, we challenged an entrenched industry while maintaining the financially transparent records of a publicly traded company. We believe that the measures we began rolling out last week will immediately reduce cash burn by 60% and will continue to generate lower funding needs in the future.
The above statement was followed up by Mitch Lowe, CEO at MoviePass. Here’s what he had to offer:
These changes are meant to protect the longevity of our company and prevent abuse of the service. While no one likes change, these are essential steps to continue providing the most attractive subscription service in the industry. Our community has shown an immense amount of enthusiasm over the past year, and we trust that they will continue to share our vision to reinvigorate the movie industry.
Why This Is Too Little Too Late
While this is a step toward profitability, Helios and Matheson has greatly diluted shares and seen a massive reduction in value as investors lose faith. This is all the result of the company’s massive growth at the $9.95 per subscription price point of MoviePass.
Now, between subscription and non-subscription revenue, the company will bring in $18.95 to $20.95 per subscriber. Considering the average cost of a movie ticket ($8.97), the third time each subscriber goes to the movie theater in a month, that subscriber will generate a loss of between $5.96 and $7.96 per subscriber.
Not to mention the fact that chances are that many subscribers are likely to cancel their subscription. Think about it, HMNY just announced that MoviePass subscribers are going to have to deal with a 50% price increase and limitations as to how and when the MoviePass subscription can be used.
Considering this, MoviePass has greatly reduced its audience and those that do subscribe will likely use it 3 or more times per month, creating even more financial blues for HMNY.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news causes moves. In the case of Helios and Matheson Analytics, the news did prove to be positive, no matter how short lived this positivity is likely to be. So, it comes as no surprise that the news excited investors and sent the stock on a run for the top. Of course, our partners at Trade Ideas were the first to alert us ot the gains. Currently (10:03), HMNY is trading at $1.08 per share after a gain of $0.28 per share or 35.53% 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’l l bewatching to see if the company can step it up and make it to profit. While we believe that it would be a far stretch, anything can happen in the market. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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