July 25, 2018
Helios and Matheson Analytics tried to pull a magic trick at the market close July 24, transforming company shares – worth 8.5 cents – into $21.25-per-share valuation following a 1-for-250 shares reverse stock split.
After-market naysayers sent shares of the MoviePass’ parent tumbling further to open July 25 at $14.23 per share.
The stock plummeted another 50% to close July 25 at $10.60 as badgered investors turn their back on HMNY’s last-ditch effort to resuscitate a business model that essentially enables subscribers to go to the movies – for free – 30 days out 31 days each month (with 31 days).
The other “day,” subscribers pay $9.95.
HMNY was forced into the reverse stock split to gets its moribund stock above the Nasdaq minimum $1 valuation for 10 straight business days to avoid being delisted.
“You do the reverse split and get over $1, but I don’t think that will attract [investors],” Erik Gordon, assistant professor University of Michigan’s Ross School of Business, told Business Insider. “I mean, theoretically there could be somebody stupid enough to go, ‘Wow, it went from $0.09 to [$14].’”
Gordon believes HMNY’s biggest challenge remains convincing investors to continue throwing money at a stock that lost 97% of its value before the split. Convincing subscribers is easy. The service expects to have 5 million members by the end of the year to break even.
Ted Farnsworth, HNMY’s ever-optimistic CEO, told Business Insider MoviePass is resilient.
“Wall Street understands how we operate,” he said. “They love the story. They think we’re the next unicorn company.”