If you’re considering an investment in Helios and Matheson Analytics Inc (NASDAQ: HMNY), I’m here to urge you against making that move! Why? Well, there are several reasons:
Start By Looking At HMNY Performance
Let’s start by taking a look at the performance of the stock over the past several months. In particular, since the stock saw its peak value on October 11, 2017. On this day, Helios and Matheson Analytics made it to the closing bell with a price of $32.90 after multiple days of dramatic runs, thanks to MoviePass news. However, since this day, we have not seen a price that high yet.
In fact, since October 11, 2017, Helios and Matheson Analytics has been in the midst of dramatic declines. Thinking about that $32.90 high the company reached, it’s hard to think that the stock has fallen so hard. Today, it trades at just $0.19 per share though it saw a gain of 2.39% so far. With that said, these dramatic declines had to come from somewhere. So, what’s going on?
Digging Deeper Into Helios And Matheson Analytics
About a year ago, HMNY was a data and analytics company. However, that all changed in August, when the company announced the acquisition of a majority stake in MoviePass. With this acquisition, the company essentially became a services company.
MoviePass is a service that allows its subscribers to go to the movie theater on a once per day basis. When HMNY acquired the service, the price for a subscription was around $50 per month, and that ultimately proved to be a sustainable model. However, at that price, the audience for the service was relatively minimal.
So, shortly after the acquisition Helios and Matheson Analytics reduced the price of a subscription to just $9.95 per month. Of course, at such a low price, consumers saw the value in the service and started buying it like it was going out of style. Soon, HMNY was boasting incredible subscription growth with users over 500,000 in what seemed to be about a month!
However, that’s when all the pain started. You see, in order to provide their services, HMNY pays 100% of the movie ticket prices for movie tickets used by MoviePass subscribers. At just $9.95 per month for a subscription, subscribers who go to the movies more than once per month generate a loss for the company, and investors started to realize it.
Soon, HMNY was moving forward with offerings both public and direct, in an attempt to keep up with the mounting costs associated with the MoviePass service. This started what I believe will be a revolving door that will lead to the demise of the company.
Ultimately, subscribers continue to grow, but HMNY hasn’t found a way to turn a profit from MoviePass, and they’re not likely to do so. As a result, the company will likely continue moving forward with offerings until that dries up, only to try and sell a failing asset that, in the end, no one will want.
HMNY Sees This Coming!
It’s hard to argue the concept that Helios and Matheson Analytics doesn’t see that it’s in trouble as the company is reaching for straws in a desperate attempt to figure out a profitable avenue for the service. Ultimately, the company has moved forward with multiple acquisitions of other companies in the entertainment industry, looking for one that it can turn into a profitable option. Yet, this has failed. So, following the news of acquisitions, the company has looked for further funding from the market.
The Bottom Line
The bottom line here is a simple one. Helios and Matheson Analytics was a decent company as a data and analytics company with a product known as Red Zone Maps. However, after spinning off the only valuable asset they had, Red Zone Maps, the company is stuck scratching its head, looking for ways to return value to investors. Unfortunately however, chances are that this return of value simply isn’t going to happen!