Recently, Helios and Matheson Analytics Inc (NASDAQ: HMNY) has been on a tear upward. Every step of the way up, we have been warning potential investors that while the stock may LOOK pretty good, it’s ACTUALLY one of those holes in the ground to throw unwanted money into. Well my friends, those who heeded our warnings are happy they did today as the stock falls like a brick from the Empire State Building.
So, why is HMNY falling? The answer is simple. If you’ve read our work on the stock, you’ve known that another dilutive offering was coming soon. After all, the company had little by way of other options. Well, that dilutive offering is here, and investors are pretty upset about it. Today, we’ll talk about:
- The offering;
- why this is likely the next of many;
- what we’re seeing from the stock;
- and why Helios and Matheson Analytics isn’t a stock that we believe deserves your investment.
HMNY Dives On Dilutive Offering
As mentioned above, Helios and Matheson Analytics investors are pretty upset as the moment as the stock takes a dramatic dive. Ultimately, the reason for the declines has to do with an offering. In a press release issued early this morning, the company announced that it has entered into an At the Market (ATM) equity offering sales agreement. The agreement was signed on April 18, 2018 with Canaccord Genuity LLC.
According to the agreement, HMNY plans on selling shares of common stock with an aggregate value of up to $150 million through Canaccord. In the release, the company said that the funds from the offering would be used to increase its ownership stake in MoviePass as well as to support the operations of MoviePass and MoviePass Ventures. The company will also use the funds to satisfy all amounts payable under previously issued convertible notes and for general corporate purposes. Is this any surprise? If you’ve read our posts on HMNY in the past, you knew that this offering was coming and it was to support the MoviePass service, a service generating massive and growing losses.
This Wont Be The Last Offering
Since Helios and Matheson purchased the majority stake in MoviePass, we’ve seen multiple offerings. At the end of the day, each one of these offerings was for the same reason. Essentially, HMNY will purchase a larger stake in MoviePass, and in doing so, bale the company out due to the massive losses it is taking.
The only problem is that at the moment, HMNY already owns 92% of the company. Pretty soon, they’ll own 100% at this rate. However, while they continue to buy up stock in the company, it continues to generate larger and larger losses. These are losses that Helios and Matheson can’t afford to foot the bill on. So, as the losses grow, the company is likely to continue looking to the market for funds in transactions that will continue to greatly dilute the shares of the stock.
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 is important. After all, it’s the news that causes moves. In this particular case, the news had to do with dilution, which is never a good thing. So, it’s no surprise to see that upset investors are selling the stock off and sending it toward the bottom. As is almost always the case, our partners at Trade Ideas were the first to alert us to the declines. At the moment (8:22), HMNY is trading at $2.90 per share after a loss of $0.93 per share or 24.28% thus far today.
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Take This As A Warning To Stay Away From HMNY
While Helios and Matheson continues to release positive news about MoviePass user growth, investments from large companies, and acquisitions, it seems as though the company is using this news to mask what is actually going on. MoviePass is generating massive losses, and HMNY is footing the bill at the expense of its investors. My friends, I started this company and my partners got involved to warn investors about companies just like this while presenting other, more lucrative opportunities. Consider this your warning! Any investment in HMNY will likely generate losses over time, well, unless you play the short side!
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