Helios and Matheson Analytics Inc (NASDAQ: HMNY) is a stock that has been in the limelight quite a bit as of late. The company took a majority stake in MoviePass, an unlimited movie theater subscription service, late last year. Since then, the service has grown alongside losses, and while many experts have been warning about the demise of the company, millennials seem to be in love here. Today, we’ll talk about:
- Millenial interaction with HMNY stock;
- why this is a big mistake;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Millenials Seem To Love HMNY
As mentioned above, Helios and Matheson Analytics is a company that, while losses continue to grow, has received quite a bit of limelight as of late, and millennials are eating it up. Robinhood, a free trading app that is overwhelmingly popular among younger investors, found that its users are buying up HMNY stock. In fact, the stock was purchased more last week than any of the platforms top 100 options. According to Robinhood, about 32,000 users own the stock, a 28% increase from a week ago. As a result, it is #32 in the most popular stocks on the platform.
Why This Is A Big Mistake
At the end of the day, no matter what we do, we’re likely to make a mistake when we start something new. Unfortunately, it seems as though young investors are doing just that with HMNY – they’re making a mistake. The truth is that I understand this. The company has been at the center of attention for some time. This, combined with incredible user growth and what appears to be a great service, suggests that the company could see strong growth from here. However, there’s more to it than that.
The fact of the matter is that creating a good product is only one hurdle when it comes to business. The biggest hurdle, no matter what the product is, is turning the product into a profit. I won’t lie, Helios and Matheson Analytics has a great product with MoviePass. However, the company is far from profitable, so chances are that the product won’t be around long.
In fact, when we dig into the details, we see just how much of a failure MoviePass is likely to be. Due to the high cost of movie tickets and the fact that the company pays the full price each time any of its subscribers go to the movie theater, the company is losing money with just about every subscriber. In fact, HMNY is currently burning through more than $20 million a month. That’s horrible news considering that the company only had about $15 million in cash on hand at the close of the first quarter.
As a result of the financial blues the company is facing, chances are that new financing is going to need to come down the line. Given the history of the company since the purchase of the majority stake in HMNY, chances are that this will take place via an offering that will dilute shares and lead to further declines. Following the offering, the company will likely continue to work to become profitable, failing at every step, leading to more negative financing and further declines. MILLENIALS… I KNOW THAT YOU WANT TO MAKE MONEY HERE, BUT THIS IS THE WRONG PLACE TO DO IT! At the end of the day, Helios and Matheson’s plans with regard to MoviePass are flawed, and I would hate to see young investors being the ones that pay the price as a result.
What We’re Seeing From The Stock
As investors continue to see the issues facing Helios and Matheson, the stock continues to decline. Of course, our partners at Trade Ideas were the first to alert us to today’s declines. At the moment (10:28), HMNY is trading at $0.64 per share after a loss of $0.019 per share (2.91%) 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 watching to see if, by some miracle, the company is able to turn around and generate a profit. While we don’t expect this, anything can happen. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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