Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having yet another incredibly rough start to the trading session, and for good reason. The company moved forward with what can only be described as a ridiculous move when it processed a 1-for-250 reverse stock split. Ultimately, this opens the door to more dilution and more losses for investors as management lines their pockets. So, it’s no surprise that we’re seeing some pretty big declines, bringing the stock to record lows (even though it looks like the stock is far higher than it was on Monday thanks to the reverse split). Today, we’ll talk about:
- The reverse split and why it’s such a bad thing;
- what we’re seeing from HMNY in the market this morning; and
- what we’ll be watching for ahead.
The HMNY Reverse Split Brings The Company From Bad To Worse
As mentioned above, Helios and Matheson Analytics is having an overwhelmingly rough start to the trading session this morning as investors take in the ridiculous reverse split. Due to massive declines seen on HMNY over the past several months, the stock fell well below the $1 per share NASDAQ listing requirement. To remedy the issue, the company decided to move forward with a reverse split. However, this split was like no other.
In general, reverse splits may be 1-for-10, 1-for-15 or even 1-for-20. However, the reverse split HMNY moved forward with was a 1-for-250, bringing the stock from $0.10 per share to $25 per share, well above the NASDAQ listing requirement. However, the split signifies big issues to come.
You see, there’s only one reason that Helios and Matheson Analytics would want to do such a big reverse split. That reason is to push the stock value up dramatically, well above the listing compliance point. This leaves quite a bit of room for the stock to fall.
To me, this suggests that further offerings will be coming down the line relatively soon. At the end of the day, HMNY has been struggling to keep cash in the bank since its majority-owned subsidiary, MoviePass started seeing growth. After all, the service only costs users under $10 per month, but MoviePass pays the full price for movie tickets used by subscribers. So, the second time a subscriber goes to the theater in a month, that subscriber generates a loss.
These losses have grown to become so massive that HMNY has been forced to move forward with multiple offerings in a matter of months to cover the cost of the service. Of course, these offerings led to dilution and massive declines in the value of the stock. Now, with the stock trading well above $1 per share, there’s more room for offerings and more room for losses, which are likely coming in a big way!
What We’re Seeing From The Stock
With the recent reverse split and what it signifies in mind, investors are growing more and more concerned about Helios and Matheson Analytics. So, it’s only natural that we’re seeing massive declines in the value of the stock this morning. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (8:22), HMNY is trading at $17.00 per share after a loss of $4.25 per share or 20.00% 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 following the company to see how many offerings and other horrible moves are made before the company finally finds its way to bankruptcy. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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