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Former Helios and Matheson Analytics (HMNY) Bull Clears Right Out of Stock

Seeking Alpha's Ben Rabizadeh has sold off all his remaining HMNY shares on his once "big speculative play."


Helios and Matheson Analytics Inc (NASDAQ:HMNY) has been a volatile rollercoaster ride for investors lately, going down on cash burn panic and springing right back up like a yoyo on the heels of Citadel Securities’ investment. Yesterday was another down day for HMNY stock, which took a 12% plunge once more.

Seeking Alpha blogger Ben Rabizadeh believes it was high time to flee unstable ground and sold off HMNY at $4.50 through $2, citing blatant risk flags from SEC investigations to lawsuits. Instead, the analyst recommends Smith Micro Software, whose alliance with Sprint is officially in motion.

Thanks to Sprint’s 350,000 users in its installed base, Ben Rabizadeh sees this translating to $14 million in high-margin revenue for Smith. The blogger wagers Smith boasts good odds to be profitable by the third quarter and has $0.81 in EPS power within grasp by 2020, assuming a $16 stock price. Additionally, Rabizadeh sizes up Aehr Test Systems and Chanticleer Holdings as “other stocks in a similar position at key inflection points in their business model.”

This is coming from the perspective of a former bull who used to cheer HMNY’s majority owned subsidiary movie-ticket subscription platform MoviePass as his “big speculative play.” While the blogger once was among the “many” willing to ride the “wave” that saw this tech player leap from $3 to $38, present-day, “nearly everyone lost their gains on the stock.” Before, Rabizadeh backed HMNY’s MoviePass and its potential, believing in the four beams of a stellar investment opportunity: brand, industry, management, as well as moat. Each one of these was once a check for the blogger.

The bullish tide started to fall mid-April, when MoviePass CEO Ted Farnsworth referred to a $375 million “line of credit” that was actually merely the “pre-existing shelf offering.” This did not sit well with the blogger, who notes he “found this to be extremely dishonest and in fact perhaps even criminal – especially after a pattern of other management claims which turned out to be false,” adding: “This prompted me to sell most of my position at $4.50 on that day.”

While Rabizadeh did not sell off every one of his HMNY shares that day, he did dump more than three-quarters of his common stock ahead of the financing the following day. Moreover, the blogger liquidated his final shares at a bit over $2 the morning the bomb of the 8-K was dropped, cautioning shareholders of a narrative where credit card companies held back funds from upfront yearly fee plans. The same morning, Rabizadeh went short through puts and climbed the crash seeing the stock sink under $1.

“At present, I have no position in HMNY other than some worthless call options and I do not plan on getting back in until the story changes for the better. I do believe MoviePass may still succeed but due to the death-spiral nature of their current ATM financing, HMNY might first go down to sub-pennies before it goes on a 1,000% run. I do believe significant near-term risk remains including the possibility of lawsuits and SEC action against the company so I will simply watch things as an outsider for now and will react accordingly when the next news (good or bad) hits,” asserts Rabizadeh, who has utilized his HMNY assets to instead boost his holdings in three other compelling stocks on the brink of meaningful “turn-arounds.”

According to TipRanks, which measures analysts and financial bloggers’ performance based on how their calls perform, Ben Rabizadeh is ranked #6,359 out of 6,529 bloggers. Rabizadeh has a 0% success rate and forfeits 88.3% in his annual returns. When recommending HMNY, Rabizadeh loses 96.0% in average profits on the stock.

TipRanks indicates Wall Street’s sentiment is positive on this tech player. All 3 analysts polled in the last 3 months rate a Buy on HMNY stock. With a monster return potential of 3,820%, the stock’s consensus target price stands at $13.33.