MoviePass Parent Pounded by Shorts

By Douglas A. McIntyre Updated Jan 11, 4:40PM EST · Published Oct 10, 6:25AM EDT

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MoviePass Parent Pounded by Shorts — © Antonio_Diaz / Getty Images

Short sellers have ripped into Helios and Matheson Analytics Inc. (NASDAQ: HNMY), parent of falling MoviePass, a subscription service for moviegoers. For the period that ended September 28, shares sold short in the company rose 47% to 67 million, which is over 10% of the float.

The short position is an easy gamble, based on the trouble MoviePass has faced and still faces. Helios and Matheson keeps running low on money. Its stock trades below two cents. It is a walking, barely, candidate for bankruptcy. The company said it recently raised $65 million. That has led to betting on how quickly the money will be gone, not whether Helios and Matheson can use it to fix MoviePass. It is not a fraction of enough capital.

Too few investors believe that consumers want MoviePass at all. Theater chains have created their own competition. Moviegoers may just want to buy their tickets movie by movie. Troubles at MoviePass have frightened some people away. And people increasingly watch their movies via services from Netflix and Amazon Prime, each of which has tens of millions of members.

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Helios and Matheson also faces a slew of class action suits that claim it misled investors about the prospects for MoviePass’s growth. Whether those who have sued the company prevail, the litigation will be expensive and cost management time, neither of which it can afford.

Helios and Matheson is walking dead. The issue for short sellers is just at what price they went short. The stock will never recover.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.