The Hard Times of Helios and Matheson (HMNY) May Only Be Getting Worse

Last October, Helios and Matheson (NASDAQ:HMNY) was calling out to all bulls. The stock had climbed all the way up to 32.90, its record high in over a decade, and HMNY seemed to be in a good position moving forward. Seven months and -32.81 points later, though, Helios finds itself trapped in the deeper hole than it could possibly imagine. The worst part is that this time, it may never be able to bounce back.

Top blogger Bill Maurer gives his two cents on Helios’ upcoming moves and its outlook for the future. Maurer, incredibly bearish on HMNY, advises all investors to “sell while you can,” firmly believing “the situation will only get worse.” (To watch Maurer’s track record, click here)

HMNY’s signature service, MoviePass, is a subscription based business that was founded on the terms that its users can view to one movie every day in any theater across the U.S. for only $10/month. For even a semi-frequent movie goer, this deal is almost too good to resist. Though, on these conditions, MoviePass was not sustainable let alone profitable. In Q1, the company’s $68 million operational cash burn amount to a $26 million net loss, so it changed its subscription terms from one movie per day to four movies per month. Still, Maurer maintains that MoviePass is not showing much promise, and as it currently sits in the ditch dug by its too-good-to-be-true business model, the analyst is unsure if it will ever be revitalized.

Helios shot itself in the foot with its initial MoviePass terms, and even now that it has reshaped the business, its future is anything but promising. As if the business wasn’t having enough issues on its own, AMC recently launched “Stubs A-List,” which Maurer sees as huge potential threat. Stubs A-List offers the viewing of triple the movies at only double the price, so if MoviePass isn’t putting itself into bankruptcy, AMC very well might.

Since realizing its downfall, Helios issued a 1:250 reverse split for its stock, so shareholders who held 500 shares at ~$.09 each will now have 2 shares at $22.50 a piece. If HMNY had traded below $1 for 30 consecutive days, NASDAQ would be permitted to delist it, so Helios had to go through with this move to keep its head above water. As dilution continues to speed up, Maurer believes the situation will only worsen and strongly advises immediate selling.


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