HMNY Longs: The Most Gullible Bulls in the China Shop

We don’t mean to be rude…and I apologize personally and profusely if the title offends you. But the “Bulls” of HMNY have been wrong time and again…and again and again…and the cool-aid must taste terrible now, no?

Let me explain. In short, (because I know you’re all generally aware about MoviePass and HMNY), HMNY has been on a tail spin for a long while now. At first, the concept of a subscription service for movies was a solid idea, and the price point was so attractive that everyone was sure they would build an army of subscribers. But the Math of giving away as many as 1 movie per day for $9 per month was, to put it mildly, “nutso.”

As the months went by, that pricing point proved to be too heavy a burden for HMNY and after spending about 20 mil a month just to keep the lights on, HMNY started to see some real problems, and honestly, they seemed self inflicted and comical from an outsiders perspective. Let’s count the ways in which they tickled our funny bone:

1) It was laughable when they had to borrow $5 million so MoviePass cards would work.

2)It was ludicrous when the CEO told shareholders that if only they approve a Reverse Split, and a giant set of shelf warrants totaling 5 Billion (with a B) shares that HMNY could fix the problems caused by their pricing mistakes.

2b) At the same meeting, it was comical when they claimed they had no idea if they’d use the full 250-1 RS, that it could be on the lower end, and then THE VERY NEXT DAY, somehow made up their mind when they determined that, yes, indeed, they needed to do the max 250-1 Reverse Split.

3-5) It was hilarious when they changed the metrics of a subscription from 1 daily to 1 weekly. And again when they changed back. And again when they changed it 2 more times and landed on their current 3 movies a month…?

6) It was a riot when just the other day they filed a form with the SEC that claimed they needed to ask shareholders to approve a 500-1 Reverse Split just 3 weeks after the last one because their stock price had plummeted to less then .02 cents and they weren’t in compliance with Nasdaq listing requirements.

6b) And it was even funnier when later in the same document they listed a number of requirements beyond the $1 minimum price that they might not meet even with the Reverse Split.

7) It’s absolutely hysterical beyond imagination that Sinemia, the company that has offered movie subscription services at a much more thoughtful pricing point and done so profitably, came in and began offering the same, “unlimited 1 movie a day,” subscription service within a week of MoviePass cancelling it.

7b) It’s a nice 1-2 punch that Sinemia is offering it at $30 per month when MoviePass refuses to even try.

The story has been written for them I’m afraid. If they do become a successful profitable business it’ll be after years and years of funding losses through dilutions that minimize the value of existing shareholders positions.

If you’re a shareholder, and angry, you have every right. The fact that they have to Reverse Split again in order to continue diluting their shareholders is beyond frustrating I’m sure. And the fact that if they don’t approve there’s a good chance HMNY will be unable to borrow the money necessary to fund their operations. And the fact that HMNY is 99% owned by regular joes (retail shareholders instead of institutions or insiders) is a GIANT red flag.

HMNY has banked on their shareholders blind faith in the system. They have had no problems telling half truths to shareholders in order to get funding. They once had to borrow 5 million dollars because nobodies cards were working, which is enough money to fund their operation about 7 days. They have convinced their shareholders that they are special, when there are plenty of competitors with pretty valuable offers out there. They have taken full advantage of their shareholders gullibility at every level.

That goodwill is running out. Be advised. Black Ink alerted a Short Sell at the last Reverse Split and within 3 days it was 99% profit. If they get a Reverse Split approve, you can bet that those shares they got approved are going to be sold on the open market, diluting the shareholders, and dropping the price like a rock.

No information expressed or distributed by Black Ink Economics constitutes investment, trading, or financial advice. Black Ink Economics’s mission is to educate people on how to trade and to further people’s knowledge as to the workings of the financial markets. Any information presented or distributed by Black Ink Economics is for education and entertainment purposes only.

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