Helios and Matheson Analytics Inc (NASDAQ: HMNY) had an incredibly rough day in the market yesterday, and the declines are continuing today. It’s interesting to see considering that this is a stock that led to quite a bit of debate any time we said anything bearish about it. Nonetheless, our biggest concerns surrounding the stock are starting to come to fruition, and the company’s die-hard investors are paying the price. Today, we’ll talk about:
- The big problem that HMNY faces;
- what we’re seeing from the stock today; and
- what we’ll be watching for ahead.
HMNY Isn’t A Diamond In The Rough… It’s Just A Chunk Of Coal!
For some time now, we’ve been warning investors that Helios and Matheson Analytics just isn’t the place to be. However, not only did these warnings get shrugged off, but we received quite a few emails telling us just how wrong we were. Nonetheless, to those who sent those emails, I invite you to send your apology! At the end of the day, the warnings we were giving were very valid, and that can be seen by what’s happening with the stock today.
The reality is that the warnings surrounded the fact that we believe that HMNY will NEVER BE PROFITABLE! With a broken business model, the company is destined to throw money into the burning trash can until it meets its demise. This has to do with the price of its services and how much it pays to provide them.
You see, the company’s claim to fame is MoviePass. Consumers pay a small monthly fee that costs less than the cost of a movie ticket, and, from there, they have the ability to go to the movies on an unlimited basis. The problem is that, while the fee being charged is generally less than the average movie ticket in the United States, HMNY pays the full price of a movie ticket every time their customers go to the movie theater.
Recently, MoviePass tried to combat this issue by limiting the number of movies that could be seen by subscribers on a monthly basis. However, the backlash from this change caused them to quickly change focus and allow consumers to go back to unlimited movies. So, where’s the problem?
Due to the massive number of subscribers using the MoviePass service, HMNY is burning through about $22 million a month. At the end of April, it only had $15 million in cash on hand. So, by now, the company is likely flat broke and trying to figure out a way to bring funds in. This could mean dilution, toxic financing, or a whole slew of other options that aren’t best for investors.
What We’re Seeing From The Stock
Yesterday, when investors realized just how broke Helios and Matheson was, the stock fell by more than 30%. Today, while the declines are slower, they are indeed continuing. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (9:19), HMNY is trading at $1.42 per share after a loss of $0.03 per share (2.07%) 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 company to see what it does to cure its financial blues. While we don’t believe that MoviePass is going to be around forever, chances are that the company will pull for straws until there are no straws left. Nonetheless, we’ll continue to keep an eye out and bring the news to you as it breaks!
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