Why Helios And Matheson Crashed 30% Today

Helios and Matheson Analytics Inc HMNY stock crashed more than 30 percent on Tuesday after a new filing from the company painted a fairly bleak picture of the company’s financial situation. In addition, the CEO of AMC Entertainment Holdings Inc AMC trashed MoviePass’s model on the company’s earnings call on Monday afternoon.

What Happened

In a new 8-K filing, Helios said it has made several tweaks to its MoviePass service that has cut its cash burn by 35 percent. Even after the changes were implemented, Helios said it's still burning $20 million in cash per month and has just $15.5 million cash available and another $27.9 million on deposit.

This comes after Helios CEO Ted Farnsworth told Variety last month the company is “sitting on hundreds of millions of dollars of dry powder" and told Benzinga the company would be profitable by the end of the year.

Why It’s Important

On Monday evening, AMC CEO Adam Aron said MoviePass paid AMC $12.02 per ticket to AMC in the month of April, and its subscribers went to an average of 2.75 movies. MoviePass subscribers currently pay $9.95 per month for a subscription.

“Now, I took the calculator out and I multiplied 2.75 times $12.02 and I got to a number that was considerably larger than $9.95,” Aron said, suggesting the MoviePass model doesn’t make financial sense.

Farnsworth disputed Aron's numbers and told the New York Post he's "not worried about the cash burn at all."

What’s Next?

Following Tuesday’s crash, Helios stock is now down 87 percent in the past six months. Investors will be watching to see if the company can demonstrate a path to probability before it runs out of cash and/or dilutes its shareholders into oblivion with further public offerings.

At time of publication, HMNY shares were down 29.7 percent at $1.48.

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