Helios and Matheson Analytics Inc (NASDAQ:HMNY): Shorts Covered, Stay Long

Helios and Matheson Analytics Inc (NASDAQ:HMNY) has been one of the most closely watched company's on the market over the last couple of months, having run up from around $2.50 a share to more than $32 a share early September to early October.We tracked it all the way up and gave our thoughts on the move along the way.On Thursday, short seller Andrew Left tweeted his thoughts on the run, suggesting that the entity that's driving the upside in Helios, MoviePass, in which the former has a more than 50% stake, couldn’t be profitable if it continued to sell subscriptions at such a low rate because it would only take a couple of movies a month for users to be spending more at cinemas than it is paying MoviePass for the privilege.Subsequent to Left's Tweet, the stock dipped close to 40% and Left covered his position.The company is now attracting all sorts of negative attention and, as such, chances are we will see a little bit more near-term weakness. However, long-term, we maintain our stance on this one as bullish and we do so based on a variety of reasons.Here is what we are thinking.First, Left's argument that the price is too cheap to sustain isn't really a valid one. As MoviePass CEO Mitch Lowe has pointed out in the past, expectations (and there is data to support this) that the first few months of a subscription will see the highest rate of movie visits but, subsequently, visits will drop substantially per user. HMNY Daily ChartThis means that the company might be losing money for the first few months of a subscription, but should quickly recover the lost cash as the subscription matures. Every company pays money to acquire users – this is just MoviePass' way of doing exactly that.Second, and looking a little bit farther forward, subscription rates aren’t the only revenue stream open to MoviePass.The company expects to have 2.5 million subscribers by midpoint next year. The vast majority of these are millennials and every one of them provides a unique data set to MoviePass. With the company now in bed with Helios and Matheson which is, by the way, a data analytics company, this data could be incredibly valuable and will most certainly command premium pricing from companies interested in identifying media consumption trends among this tech-savvy generation.And these are just a couple of options.There are concessions, content production, and a whole host of other alternative revenue streams that, once a user base is big enough, open up to a company like this. People are comparing it to Netflix and sure, there are similarities, not least the subscription model, the media consumption product and the CEO.However, that MoviePass is trying to be a loss leader early days is hardly a point on which to base a short position.There is a good chance we will see this company IPO next year and, when it does, profitability, or at least potential for profitability, will be questioned. Right now, however, in its growth phase, it's all about expansion.As we have noted in the past, there are certain risk factors associated with movie theaters coming on board with the subscription idea and certain restrictions involved in the service that the company is offering to users. There's also a risk rooted in big companies (AMC, we are looking at you) managing to mount a counter challenge MoviePass' legal right to allow its users to go to their theatres.Right now, however, this risk is dwarfed by the potential for growth ahead of an IPO and Helios and Matheson is offering investors early access to said IPO – something that just doesn't happen in the technology space.Left is no longer short, he knows when to cover. We're still holding a long bias.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 Kenneth Lu via FlickrDisclosure: We have no position in HMNY and have not been compensated for this article.