Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having an overwhelmingly rough start to the trading session this morning, trading at record lows. However, you can’t say we didn’t warn you. While no news has been released, when you have a company that is failing miserably with their flagship product and reaching for straws in order to cover the losses, you don’t need news to see declines. Today, we’ll talk about:
- Why we believe HMNY is headed for zero;
- what we’re seeing from the stock today; and
- what we’ll be watching for ahead.
HMNY Is Headed For Zero
We have been on Helios and Matheson Analytics like flies on a pile of dog dung, and for good reason. The stock caught the attention of many shortly after it acquired a majority stake in MoviePass. With a massively growing audience, investors were excited as they saw an opportunity for profit. The only problem… well, HMNY isn’t turning a profit. While seeing massive growth in subscribers, the company is only seeing expanding losses.
The big issue has to do with how the company got to the massive growth. The company greatly reduced the price of the MoviePass service, attracting a massive audience. However, with the low prices, the company simply can’t cover expenses. Let’s break this down:
- HMNY pays the full price for movie tickets used by subscribers. Currently, the average price of a movie ticket in the United States is $8.97.
- The MoviePass service costs $9.95 per month and allows subscribers to go to the movies all they want.
- This means that the average user generates a loss for the company the second time they go to the movie theater each month.
You don’t have to be a mathematician to see the issue here! Going forward, the company has promised to make deals that will generate profits from its audience by taking percentages of concessions, marketing movie titles, and more. However, while the company has inked small deals, they haven’t been able to turn a profit or even come close to it.
Now the company is reaching for straws, looking for ways to make a profit, and honestly, their attempts are pathetic. The company is acquiring other companies in the industry, further expanding its losses, and even has plans to open its own film production studio! The only problem is film production and launching new services, well that all costs money, and HMNY simply doesn’t have it. In fact, with its last earnings report, we learned that the company only had around $15 million in cash on hand and was burning through around $22 million a month! Those numbers simply don’t add up, leading us to the conclusion that the stock is on the path to zero!
What We’re Seeing From The Stock Today
As investors continue to put two and two together with regard to Helios and Matheson Analytics, the stock continues to fall. In fact, it’s currently trading at incredible lows, and if it closes here, it will be a new record low. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (10:44), HMNY is trading at $0.36 per share after a loss of $0.032 per share (8.12%) 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 interested in seeing how long it takes the company to go bankrupt considering the mounting expenses it is putting upon itself. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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