Helios and Matheson Analytics Inc (NASDAQ: HMNY) is a stock that we’ve followed here at CNA Finance for some time now, and today, we’re comfortable with a prediction of the future. Now, of course, no one can read the future. However, with what we’ve seen from the past, we believe that there is only one way for this to happen for HMNY. Here’s what we see happening:
Continued Growth In Losses
Helios and Matheson Anaytics became a popular topic when it acquired the majority stake in MoviePass. Today, it owns 92% of the unlimited movie theater experience subscription service. While this acquisition catipulted the stock to the top of news feeds, it has also led to massive losses.
After acquiring MoviePass, HMNY reduced the price of the service to under $10 per month. This was a bad move. Ultimately, the company pays full price for movie tickets used by its subscribers. So, by reducing the cost of the subscription to a price that’s comparable to a single movie ticket, the company simply asked for losses. Unfortunately, that’s what it has gotten, and chances are that as the service continues to grow its subscriber base, losses will only continue to grow as well.
In order to cover the massive expenses associated with its majority stake in MoviePass, HMNY has moved forward with several public offerings and private placements. Each time it does this, the company issues new shares, diluting the shares that are currently out there and essentially taking value from its investors in order to try to plug the holes in a sinking ship.
Nonetheless, because MoviePass is so cheap to the consumer and so expensive to the company, losses are likely to continue to grow. Therefore, there’s no reason to expect that the company isn’t going to continue to dig in the pockets of investors with further offerings that only dilute shares. At the end of the day, it’s dilution that’s currently keeping Helios and Matheson Alive.
The Sale Of MoviePass Or Demise Of The Company
At some point, HMNY is going to have a tough decision to make. Either the company will have to admit that it failed and try to recover some value from a MoviePass asset sale, or it will likely find itself bankrupt, squeezed under the mounting cost of keeping MoviePass alive.
What We’re Seeing Today
While Helios and Matheson Analytics is headed for the bottom, it has had some good days in its run to zero. Today is proving to be one of those good days. In fact, our partners at Trade Ideas alerted us to the gains early on. Currently (9:00), HMNY is trading at $0.15 per share after a gain of $0.0035 per share or 2.33% thus far today. Nonetheless, don’t let the gains fool you, the stock is destined for further declines!
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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 MoviePass and what the company does in order to reduce the cost of the service to itself. Nonetheless, we believe that no matter what the company does, it’s headed on a path to nowhere and at the end of the line, will find little more than bankruptcy. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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