Helios and Matheson Analytics (HMNY) Stock: Concerns Only Grow Larger

Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having a pretty strong start to the trading session early on this morning. The gains are the result of an earnings release that alleviated some fears. However, in my opinion, the fears should only be growing. Today, we’ll talk about HMNY earnings, what we’re seeing from the stock and what we’ll be watching for ahead.

HMNY Reports Earnings

As mentioned above, Helios and Matheson reported its earnings for the third quarter this morning. While the report proved to be a positive one, I still have my concerns. First, let’s discuss the results:

  • Losses – Losses are shrinking for HMNY, with the company producing a diluted net loss per share or $0.20. This is a massive reduction in losses from the loss of $5.79 per share reported in the third quarter of 2017.
  • Debt – The company said that it extinguished its June 2018 notes with an aggregate of $164 million.
  • Subscription Revenues – MoviePass revenues increased by 9.8% to $80.5 million. The increase is primarily the result of the subscription service, which generated $79.9 million compared to $72.8 million in the same quarter one year ago.
  • Gross Margins – Also, HMNY said that MoviePass Segment gross margins improved by 72.8% on a year over year basis.
  • Average Monthly Usage Per Subscriber – Finally, HMNY said that average monthly MoviePass usage per subscriber is down substantially, coming in at 0.77 movies per month in september. In April, this number was 2.22 movies.

Finally, the company said that it will no longer be using ATM offerings to raise capital. In a statement, Ted Farnsworth, Chairman and CEO at HMNY, had the following to offer:

During this transitional period for Helios and MoviePass, we have been focused on reducing our burn rate and striving to improve our business model and we are very encouraged by our Q3 financial results.

Why I’m Only Growing More Concerned

At first glance, the earnings report looks positive. Losses are dropping, usage is dropping, revenue is growing, things look good, right? Well, interestingly enough, the company mentioned that subscription revenue was up compared to the same period last year, but neglected to mention subscription revenue month-over-month growth. At this time last year, and for months to follow, the MoviePass service was very different, and subscriber growth continued at a massive rate. So, a small increase in subscriber revenue year over year likely represents a revenue decrease month over month and quarter over quarter.

It’s also worth mentioning that the company is operating at a relatively large loss. While the loss has shrunk greatly year over year, it’s still a concern. Although the company said it won’t be using ATMs to raise funds anymore, there are other dilutive transactions that HMNY will likely have to tap into in the future.

Another factor here is that the company has abandonned its plans to move forward with a 1-for-500 reverse stock split. Due to this, it will likely be delisted from the NASDAQ in mid-December. All in all, my view of HMNY has not changed in the least. I’m expecting further declines ahead.

What We’re Seeing From The Stock 

Regardless of my opinion of Helios and Matheson Analytics, the company did provide a strong earnings report and investors are reacting. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:46), HMNY is trading at $0.019 per share after a gain of $0.0012 per share or 6.82% 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 story surrounding the company’s work to stage a recovery. While we believe that a recovery is still long off, anything can happen in the market. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

One Response

  1. tim Nov 15, 2018

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