Helios and Matheson Analytics Inc (NASDAQ: HMNY) is a stock that has garnered plenty of attention in the market. First, the attention came from massive gains in the market after the announcement that it took the majority stake in MoviePass and sent subscribership flying. However, as it became clear that the company couldn’t handle the losses, the stock tanked. Today, it’s trading at an incredibly low price which is driving more people in, thinking they’re getting a discount, but don’t be fooled! Today, we’ll talk about:
- What’s so wrong with HMNY;
- what we’re seeing from the stock today; and
- what we’ll be watching for ahead.
What’s Wrong With HMNY?
Recently, it seems as though investor interest in Helios and Matheson Analytics has started to build again. We’ve seen decent gains here and there and volume has been strong. So, what’s the big deal? What’s wrong with the stock? Well, in my opinion, investors are being fooled into believing that they’re getting a good deal. After all, the idea is to buy low and sell high and HMNY is trading at an incredibly low price at the moment.
So, what’s the deal? What’s wrong with HMNY? The simple answer is MoviePass. The company charges $9.95 per month for a subscription that allows subscribers to view up to 3 movies per month in theaters. The company also earns between $4 and $6 per quarter in non-subscriber revenue. That brings the total monthly revenue per subscriber to about $11.95 at best. Not too shabby right? Wrong!
The truth is that HMNK pays full price for movie tickets used by its subscribers. The total amount of money that the company is bringing in only covers the cost of about one and a quarter movie tickets per subscriber. So, if subscribers use their subscription to the fullest, the company is coming out of pocket for about one and three quarters movie tickets per month, counting it as a loss.
To cover these losses, Helios and Matheson Analytics has moved forward with a series of dilutive funding moves, ultimately taking value from investors and using that value to power an engine that seems to be designed to create more losses. To make matters worse, after all the fund raising the company has done in the past year, HMNY is once again running out of money.
Considering the state of the company, there’s little to no chance that it will be able to get its hands on a low-interest loan. I also highly doubt that management would be willing to risk their own dollars and cents to keep the company alive. So, that leaves one more option… more death spiral financing. Ultimately, HMNY is a company that’s likely to continue to dilute shares until there’s nothing left to dilute. From there, it’s losses wont be covered and it will likely fall to ZERO! That, my friends, is what’s wrong with HMNY in a nutshell!
What We’re Seeing From The Stock
While there are plenty of reasons to be concerned here, investors seem to be blinded by the low cost of Helios and Matheson shares, looking to get in at a discount and hoping that the company will rise back to the top. So, these hopefuls are leading to gains in the market today. Of course, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:20), HMNY is trading at $0.026 per share after a gain of $0.0018 per share or 7.50% 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 work to dig itself out of the hole it is in. However, keep in mind that the hole is deep and the chances are slim. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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