Helios And Matheson Analytics (HMNY) Stock: We Saw This Coming


Helios and Matheson Analytics Inc HMNY Stock NewsRecently, 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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  1. Not sure I would bet against Mitch Lowe. He’s already proven himself able to disrupt industries, just ask Blockbuster. What your article doesn’t point out is that MoviePass needs subscribers at a critical mass, and the gamble is losing money short term to gain numbers. Once they have 5-10M subscribers who are hooked on the subscription model, they can go back to theater chains and demand profit sharing. If MoviePass fails, do you really think all those people going to the movies now will go back to paying full price a la carte? Not likely. Instead they’ll go back to watching Netflix or Hulu.

    A few other things: 1) I can see Netflix or Amazon making an offer for MoviePass at some point down the line. 2) I can see Verizon offering free MoviePass — ATT has HBO, Sprint has Hulu, TMobile has Netflix…

    Finally, you’re not looking at the potential revenues coming from studios themselves. HMNY can significantly reduce marketing costs, which for big movies can be upwards of $100M.

    I can envision one day MoviePass having a market cap of maybe 5-10% of Netflix. If Netflix is worth $140B today, MoviePass might be able to justify a $7B valuation. Assuming the current OS doubles to 250M shares, that’s still $28/share. A lot has to happen but it’s not game over, by any means, just yet. In fact, it’s just the beginning.

    HMNY is certainly not without risk, but I would advise you to write a slightly more balanced article. The offering is a necessary evil but if Mitch Lowe can execute on his plan, it’s not the end of the world long term.

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