Helios And Matheson's Stock Hits New Lows

Helios and Matheson Analytics Inc HMNY closed down 15 percent Tuesday and continued to new all-time lows in pre-market trading.

What Happened

Shares sunk deeper Tuesday when Business Insider reported one of the firm’s board members and largest shareholders had his bank account frozen for allegedly failing to repay thousands of creditors.

Muralikrishna Gadiyaram is the CEO of HMNY’s former parent company, the India-based Helios and Matheson Information Technology, which was delisted from two Indian exchanges this year as it underwent court-ordered liquidation. The firm has been accused of fraud and failure to repay creditors.

Around the time BI published its report, MoviePass CEO Mitch Lowe participated in a Reddit AMA, where he was grilled about the firm’s financial stability and path toward profitability.

“Our plan is not to make money off the subscription - our plan is to break even,” Lowe told participants, later noting that “there is no guarantee of success.” “In the future, our path to profit will be by selling ads, engaging in brand partnerships and creating our own content.”

Why It’s Important

The stock fell below $1 early May and has only continued to fall. Now, at a mere 24 cents, it’s not worth even a quarter of its previous nadir value.

Hollywood Reporter attributed the decline to a number of factors, including HMNY’s recent $164 million debt and equity raise to float MoviePass, its consideration of a reverse stock split to prevent Nasdaq delisting, and the emergence of competition from AMC Entertainment Holdings Inc AMC.

Although a possible catalyst for Helios and Matheson's fall, AMC also closed down 3.7 percent Tuesday, and Cinemark Holdings, Inc. CNK dropped 2.7 percent.

What’s Next

Helios and Matheson will host a shareholder meeting in July to vote on four proposals to achieve Nasdaq’s listing standards, which require stocks to remain above $1.

Related Links:

Tech Analyst Thinks MoviePass Will Be Out Of Business Within 18 Months

Helios And Matheson's Terrible Week Puts MoviePass' Future In Doubt