2018 turned out to be a nightmare for shareholders of Helios and Matheson (NASDAQ:HMNY), as the stock price plummeted nearly 98% in the wake of signs of potential bankruptcy. The root of HMNY’s trouble comes down to MoviePass. The company’s majority owned subsidiary movie-ticket subscription platform had the Street turning sour on fears of cash burn and sustainability.
Indeed, HMNY is on the verge of bankruptcy. The company cannot survive the next twelve months without access to capital from Wall Street Banks or private investors. As such, the troubled data firm announced last week that it has commenced a best-efforts underwritten public offering to issue and sell shares of its common stock and warrants to purchase shares of its common stock. There can be no assurance as to whether or when the offering may be completed, or to the actual size or terms of the offering.
Adding insult to injury, Gary Alexander, a top-ranked blogger, wrote: “The company is facing almost certain bankruptcy. Yet the fact that $9.2 million of market value is still clinging to the company means that there are still a handful of investors out there who are hopeful that the company can pull off a successful buyout […] High-risk, high-reward investors are now circling Helios and Matheson and figuring out whether to pour money into this capital raise. In my view, Helios and Matheson’s operations will come to a screeching halt in the highly likely event that the raise cannot be sold to investors. And in any case, any amount of cash Helios and Matheson raises now is likely to evaporate extremely quickly and leave the company in an extremely precarious position.”
Alexander concluded, “Stay far away from Helios and Matheson and don’t continue funding this black hole. Leave it to the wolves. Investors’ sense of invincibility around tech startups was surprised by a rude awakening when Tintri filed for bankruptcy, something that hasn’t happened (at least, not for a high-profile name) in recent memory. Looking at Helios and Matheson’s burn rates and the dwindling cash reserves on its balance sheet, this company is next to go.”
People often ask, is it worth listening to this blogger? The answer here is clearly yes. Alexander is one of the top bloggers on Wall Street. His picks average a 22% one-year return, and he’s ranked #15 out of 6,564 bloggers, according to TipRanks.com.