Helios and Matheson Analytics Inc (NASDAQ: HMNY) is having an incredibly strong start to the trading session this morning, and under normal circumstances, I’d say it’s for good reason. The company announced that it’s majority-owned subsidiary has moved forward with the acquisition of NEON Rated. Of course, the news excited investors, sending the stock on a run for the top. Today, we’ll talk about:
- The acquisition;
- what we’re seeing from HMNY as a result;
- why the gains are likely to reverse; and
- what we’ll be watching for ahead.
HMNY Gains On Acquisition News
As mentioned above, Helios and Matheson Analytics is having a strong start to the trading session this morning after announcing acquisition news. In a press release issued early this morning, the company said that MoviePass Films and NEON Rated, now share equity ownership as the result of a deal that closed on September 21, 2018 for the upcoming releases of “Monster and Men” as well as “Border.”
In the release, HMNY said that both of these films are anticipated to open in U.S. markets within the next few weeks. HMNY went on to point out that this is a key part of their business model as it will continue to produce ancillary revenue from theaters that show its movies nationwide.
In a statement, Randall Emmett, MoviePass Films CEO, had the following to offer:
We’re thrilled to partner with NEON on these two films and to be in business with an industry-leader such as NEON… The films are high-caliber, prestige titles and are great fits for the MoviePass audience. We look forward to partnering with NEON in the future. With these two films in addition to our current slate of movies, MoviePass Films will have year-round releases.
The above statement was followed up by Ted Farnsworth, HMNY CEO and MoviePass Films Chairman. Here’s what he had to offer:
It’s great to see the different Helios media companies coming together and working towards generating more business for each other… Now with this NEON partnership, we have the honor to work with an award-winning distribution studio partner and further leverage the box office drive the MoviePass app offers theatrical releases.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Helios and Matheson Analytics, the news seemed positive. The company is executing when it comes to opening potential new revenue streams. While I’ll explain why the news shouldn’t lead to such gains shortly, I have to admit that I’m not surprised that we’re seeing gains today. As is normally the case, ur partners at Trade Ideas were the first to alert us to the movement. At the moment (10:00), HMNY is trading at $0.019 per share after a gain of $0.0052 per share or 37.14% thus far today.
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Don’t Be Fooled
The reality is that in most cases, with news like this, I would expect to see gains. However, in the case of Helios and Matheson Analytics, I wouldn’t get too excited. The truth is that the company’s past year has been marred with financial failures. As a result, it moved forward with a 1-for-250 reverse split just a few months ago and has a proposed 1-for-500 reverse split on the table now, in an effort to maintain its listing with the NASDAQ.
If that isn’t enough, look at the company’s history with regard to accessing funds. Since the acquisition of the majority stake in MoviePass, the company has executed multiple dilutive offerings, erasing hundreds of millions from its market cap in the process as upset investors showed their opinions.
At the moment, HMNY is struggling financially yet again with no signs of a recovery any time soon. With the reverse split on the table, the company will likely maintain its NASDAQ listing, giving it continued access to dillutive fund raising opportunities. Sure, the stock is climbing today, but these gains won’t last long!
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 continued work the company is doing to turn a profit. While we don’t see this anywhere in the near future and we believe that further declines are ahead, anything can happen in the market. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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