Helios and Matheson Analytics Inc (NASDAQ: HMNY) is becoming a laughable stock. The company has lost a mssive amount of its value in a matter of sessions, and that value reduction is likely to continue. In fact, I’m expecting that within the next 6 months, one of two things will happen. Either the company will get rid of MoviePass or it will file bankruptcy. Today, we’ll talk about:
- Why bankruptcy is likely on the horizons for HMNY;
- what we’re seeing from the stock today; and
- what we’ll be watching for ahead.
Why HMNY Is Headed For Bankruptcy
It all started in August of last year when the company announced that it had acquired a majority stake in a service known as MoviePass. The service had about 20,000 subscribers at the time and charged around $50 per month each to go to the movie theater on an unlimited basis.
When HMNY took over, the company dropped the price to $9.95 per month. In doing so, it gained some serious attention, growing to more than 3 million subscribers in well under a year. The only problem was that these subscribers aren’t making any money for the company.
MoviePass pays full price for movie tickets purchased by subscribers. At $9.95 per month, subscribers who go to the movies more than once a month generate a loss, and those losses are mounting. In fact, in a short few months after the announcement of the majority stake acquisition, HMNY started to move forward with offerings. Up to late last week, the company raised $324 million through dilutive transactions.
That wasn’t enough money though. In fact, last week, the company ran out of cash. This led to MoviePass subscribers not being able to use their subscription on Thursday and forced the company to secure a $6.2 million loan. Unfortunately however, considering the fact that MoviePass is losing so much money, that loan isn’t likely to last long. In fact, I believe that by the middle of next month, the company will default on the loan, forcing it to file bankruptcy due to insolvency or sell its assets. Nonetheless, it’s either going to be bad or worse!
What We’re Seeing From The Stock
As things go from bad to worse on the financial side for Helios and Matheson Analytics, investors are losing faith and dumping the stock as fast as they can. Of course, our partners at Trade Ideas were the first to alert us to the declines. At the moment (9:22), HMNY is trading at $1.63 per share after a loss of $0.37 or 18.51% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to follow HMNY very closely. In particular, we’re interested in following the story surrounding the company’s financial stability and its dramatic fall as investors see bankruptcy as one of the very few options the company has left. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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