Helios and Matheson (NASDAQ:HMNY) still has unanswered questions at play, a tech stock that has lost almost 70% in value in a little over a week’s time. An SEC filing proved to be a negative drag on shares after MoviePass spooked investors as to just how sustainable this Netflix-like business could become.
Maxim analyst Nehal Chokshi counters from the bullish corner, especially following last night’s post-market close 10Q filing, which points to more than one positive shining encouraging light on the challenged company. That said, there are certain answers Chokshi needs to learn from HMNY before he updates his valuation.
On back of “multiple positives worth noting from filed 10Q,” the analyst reiterates a Buy rating on HMNY stock with a $12 price target, which implies 1,691% upside from current levels. (To watch Chokshi’s track record, click here)
The following three encouraging points stand out to Chokshi from the 10Q filing: “(1) statements that indicate to us HMNY will present cohort data that will tell the story on how MoviePass will drive the subscriber business to breakeven over time, (2) achieved $1.4M from studio marketing & other vs. our estimate of $0.6M and our long-term steady state run rate of ~$32M/Q, & (3) survey data from 1,500 moviegoers conducted by NRG that is indicative that MoviePass is creating value for studios and exhibitors that ultimately should lead to MoviePass creating a sustainable business.”
In the 10Q filing, Choksi points out page 33 in particular, where the HMNY team asserts: “At the same time, our offering of a four-movies-per-month capped plan as part of a special, limited time offer with one of our strategic partners; and our current offering alongside our unlimited offering of a 3-movies-per-month capped plan allows us to obtain statistically large sample sizes to create short- and long-term analyses about consumption and usage and ticket spend for each of the various cohorts, which enables the Company to continue to make data-driven decisions.”
As such, the analyst anticipates the company stands to post cohort data with either second or third quarter audited results, which would “then provide the necessary data to show that the subscription business is indeed demonstrating characteristics of a breakeven business without potentially needing to implement a hard cap.”
Especially should the steep trading volume of the last five days be a constant over the upcoming few weeks, Choksi wagers it achievable for the company to raise roughly $100 million through the current At-The-Market facility established with Canaccord. “Such a raise should then give HMNY the runway needed to show data that demonstrates the subscriber business is indeed exhibiting breakeven characteristics, that should then take pressure off of shares,” concludes the analyst.
TipRanks indicates a strong bullish consensus rooting for HMNY stock’s success in the market. All 3 analysts polled in the last 3 months rate a Buy on HMNY. With a mammoth return potential of 2,007%, the stock’s consensus target price stands at $14.33.