Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having a strong start to the trading session this morning, and for good reason. The comapny announced plans to launch a three-tiered subscription plan with the hopes of driving more revenue. However, it’s important to remember that delisting from the NASDAQ may be just around the corner. Today, we’ll talk about:
- The news;
- why you should be careful here;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
HMNY Announces Three-Tiered Subscription Plan
As mentioned above, Helios and Matheson Analytics is having a strong start to the trading session this morning after announcing that it will be launching a three-tiered subscription plan starting on January 1st. It’s likely that the new plan is in response to cancellations as recent data show that only about 1 out of every 3 or 4 subscribers is actually using the service. Nonetheless, these new plans may attract new subscribers.
The plans that HMNY announced are relatively simple. The first tier comes with prices between $9.95 and $14.95 depending on geographic region, and will be the same type of offer that the company is offering right now. The next tier in the plan starts at $14.95 and can be as high as $19.95, depending on geographic region. This tier removes the restrictions on the service, once again giving users the ability to see whatever movies they’d like on a one movie per day basis. Finally, the third tier comes at a price starting at $19.95 and up to $24.95. This tier will give users one-per-day access to standard movies and one premium movie format, like 3D and Imax screenings per month.
There’s no doubt that this news is exciting HMNY investors. After all, the higher prices may drive stronger revenues, and the better perks may drive new subscribers. However, there are also some serious risks to consider here.
Risks To Think About
While the news released by Helios and Matheson Analytics today was positive, there are some serious risks to consider here. First and foremost, the company is not in compliance with the NASDAQ’s minimum bid price rule, which requires the stock to trade at an average bid price that’s no lower than $1.00. The company tried to regain compliance with a reverse stock split, but walked these plans back as they didn’t believe that investors would vote in favor. As of yet, there has been no announcement of additional plans to regain compliance. So, on December 18th, we may be hearing news that HMNY has been booted from the exchange.
Moreover, MoviePass seems to be going backwards here. While the price for the middle tier is slightly higher, between ~$15 and ~$20, the company plans on giving one-per-day access, just as it had done in the past. However, the company has yet to negotiate lower movie ticket costs with the movie theaters that accept the MoviePass. So, even at the higher end of pricing, if consumers view 3 movies per month at an average cost to HMNY per ticket of $9, the company will be losing money. Sure, they won’t lose as much as they did at the $9.95 price point, but they are opening the door to losses yet again.
Here’s the bottom line. To keep customers happy and keep subscribers going, Helios and Matheson has to be willing to take a loss. However, to keep investors happy, the company has to make money. So, the company is trying to find an even balance between the two, giving consumers value while returning investor value. Nonetheless, this may be impossible if the company cannot bring its own price per movie ticket down. Moreover, with delisting likely on the horizons, this is one that is incredibly risky.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Helios and Matheson Analytics, the news seemed to be positive. The company will be launching tiered services to drive revenue and subscriber growth. However, digging into the details tells us that the new tiers will likely leave the company where it was a year ago… eating massive losses. This combined with the coming delisting is a major concern. Nonetheless, excited investors are sending the stock on a run for the top in the market this morning. At the moment (7:32), HMNY is trading at $0.18 per share after a gain of $0.0010 per share or 6.06% 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 if the company even makes an attempt at bringing its price to the key $1 mark before being delisted. We’ll also be watching the success, or lack thereof, that comes as a result of the new tiers of service. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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