Helios and Matheson Analytics Inc (NASDAQ: HMNY) has been on the top of the watch list for many, and for good reason. With massive declines seen over the course of months, the stock is falling to what some may think is a discount rate. However, I urge you to think again here. There is no discount rate when a stock is going to fall to ZERO. Today, we’ll talk about:
- Why HMNY has seen such dramatic declines;
- why the declines are far from over;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Why HMNY Has Seen Such Dramatic Declines
As mentioned above, Helios and Matheson Analytics has had an incredibly rough time in the market over the past several months, leading to many believing that they may be able to get in at a discount. However, there’s no discount here, the declines are for a very good reason.
As I’ve mentioned in previous articles, it all boils down to MoviePass, a (once unlimited) movie theater subscription service. Ultimately, for months, MoviePass subscribers have been able to visit the theater as much as they wanted for a low price of just $9.95 per month. The problem is that MoviePass and its parent, HMNY, pay full price for movie tickets used by subscribers.
As the subscriber base on MoviePass grew, so too did the expenses associated with it. Unfortunately however, HMNY didn’t have the money to cover these expenses. So, over the course of a few months, the company moved forward with various highly dilutive transactions and lost more and more investor faith each time it made a move.
Why Declines Are Far From Over
After giving up nearly all of its value, Helios and Matheson Analytics is hanging on by a thread. In fact, many believe that the declines are nearing the end as the stock reaches support. However, I don’t agree with this assessment.
Over the past couple of weeks, we’ve been hearing about changes at MoviePass that are designed to reduce the cost on HMNY and its investor. In particular, subscribers will only be able to see 3 movies per month, rather than the unlimited access they had before. However, even this won’t pull the company out of the red. With the average movie ticket costing about $8.97 in the United States, the second time a subscriber goes to the theater in a month, more losses are experienced.
Sure HMNY is mining massive amounts of data from the service, but they have shown that this data isn’t quite as valuable as they once thought. In fact, in nearly a year since the acquisition, the company has only been able to get non-subscriber revenue to between $4 and $6 per subscriber per quarter. Ultimately, the goal of having data cover the losses and move to profit simply isn’t going to work. At the end of the day, I believe that MoviePass is a failing idea and those who are involved in HMNY will be left holding the bag at the end.
What We’re Seeing From The Stock
As Helios and Matheson Analytics continues to fall to new lows, we’re seeing some good days here and there as investors see the company reaching support. Today just so happens to be one of those days in the green. While I don’t believe it will last for too long, the stock is up. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:24), HMNY is trading at $0.051 per share after a gain of $0.0013 per share or 2.60% 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 continued efforts to get to a break even state, let alone turn a profit. While we don’t think that this will ever take place, the market has surprised us in the past. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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