x min read

Helios and Matheson Analytics Inc (NASDAQ:HMNY) Is About To Heat Up Again

Helios and Matheson Analytics Inc (NASDAQ:HMNY) Is About To Heat Up Again
Written by
Chris Sandburg
Published on
November 7, 2017
Copy URL
Share on LinkedIn
Share on Reddit
Share on Twitter/X
Share on Facebook
InsidrFinancial

It has been a little over a week since we last covered Helios and Matheson Analytics Inc (NASDAQ:HMNY) and, at the time, the company was trading considerably down on its pricing from just a few days earlier.From highs around $35 during early to mid-October, the company had fallen to around $10 a share – a decline of a little over 71%.The decline came in part due to profit taking on the steep run-up throughout September and in part due to markets letting off steam after what was (in all likelihood) an overenthusiastic response to the development that kicked it all off (more detail on this shortly).There was also an Andrew Left short position that served to temper the excitement somewhat.What we said in our previous coverage, however, is that whatever was conspiring to push this stock down, the overarching driver behind the run was very much still in place and that we felt that (once it bottomed out) the company could stage a quick return to its upside momentum and make back much, if not all, of the lost strength. HMNY Daily ChartFast forward to the start of this week and we got exactly the run we were looking for.Helios opened the session on Monday at a little over $10.30 a share. By session close, the company was trading for $14.20 a piece – a 47% run.That’s a nice return on a position at the price we said there was run room left in the stock but now we've got to ask the question, what's next?In short, we think that there's plenty more on offer here.For those that missed our coverage of this one over the last few months, Helios is running on the back of a controlling stake that the company picked up in Moviepass, which is a subscription type service for moviegoers. A $9.99 subscription allows a user to go see as many films (one a day) per month as they like and Moviepass picks up the tab by way of a Mastercard prepaid debit card system.It's a neat idea but shorts will argue that there's no money in it for Moviepass (and by proxy, Helios) if the company is only charging $9.99 for a sub. As we pointed out last time, however, the real revenue streams are going to come from outside of the subscription fee. Helios is a data analytics firm. The rapid increase in subs that Moviepass is seeing (20,000 to more than 400,000 in a matter of months) is giving the company access to a set of data that's highly valuable in an industry that's way behind the curve in terms of technical innovation.In other words, we think there's plenty of value in Moviepass loss-leading while it drives massive userbase expansion.And the latest announcement (what's driving yesterday's run) shows that the company feels exactly the same.Helios just announced that it is raising up to $100 million to increase its stake in Moviepass and to pay some notes due associated with the initial stake acquisition. This sort of move would normally translate to a dip, based on the dilution associated with a raise. In this instance, however, markets are recognizing that the cash is going to be used to fund the growth model (i.e. to allow Moviepass to continue operating at a loss) while it builds out its subscriber base or, as we like to look at it, its uniquely valuable data pool.The transaction also means that Moviepass has to waive any rights to terminate the initial purchase agreement, which ties Helios to the company ahead of its major growth phase and – in turn – gives shareholders of Helios a unique opportunity to take an early position in a high growth tech company – something usually reserved for Silicon Valley VCs.There's risk, of course. This stock is prone to overheating and the company is yet to prove that its data mining model can outweigh the capital lost through a low subs price. If it can't, the model won't work long term. With that said, there's plenty of companies right now that got a start losing money to build out a userbase and many of these have grown into billion dollar entities.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on HMNY, sign up below!Image courtesy of Bahman Farzad via FlickrDisclosure: We have no position in HMNY and have not been compensated for this article.

Discover Hidden Gems

Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.