Don’t Chase Helios and Matheson Analytics Inc Stock … Yet

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Helios and Matheson Analytics Inc (NASDAQ:HMNY) is a small-cap stock that has appeared on a lot of traders’ screens recently because it has been on an absolute tear, including doubling in just three days this month. But after a 333% run since Aug. 15, now is not the time to jump on the HMNY stock bandwagon.

Don’t Chase Helios and Matheson Analytics Inc Stock ... Yet

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Before I explain why, let me first tell you a little bit about the company.

Helios and Matheson is an information technology company, providing services like application value management, application development and other analytics services to clients in the financial services and healthcare industries.

HMNY is a “Big Data” company through and through. That on top of its huge upside growth potential is what originally led my eye to HMNY stock.

Why Makes HMNY Stock a Hot Topic?

The company really became relevant on Aug. 15, when it announced the purchase of a controlling stake in MoviePass for $27 million. MoviePass is a subscription-based online ticketing service that gives its customers access to 91% of movie theaters in the United States. At one point the subscription cost upwards of $50, but now it’s just $9.95 a month. This is a breakthrough service, and for those of you who frequent the theaters, it’s quite a steal.

HMNY stock took off as a result of the announcement, climbing from prices around $2 all the way up into the $20 range in the following months. And it’s really been on a roller coaster ride in recent days.

For example, Helios and Matheson climbed as high as $38.86 on Oct. 11 — a 146% jump from the following Friday — before dipping into the end of the week. It’s now up only 32% within the past month rather than the colossal three-figure percentage gain seen earlier.

A lot of the recent volatility has to do with the shorts, which account for about 20% of the public float. The big move in the early part of this month crushed these guys, and many started to blink. However, they did manage to win back some ground.

Too Much Too Soon for Helios and Matheson

It has been a crazy ride, and because of that as well as the fact that HMNY stock has gone on a 700% run over the last couple of months, I can’t chase it at this level. The CEO, Mitch Lowe, who is one of the founders of Netflix, Inc. (NASDAQ:NFLX), has appeared on my Fox Business show twice this year and I think he’s great. I think the company is great, too, but the recent strength is just too much too soon.

That doesn’t mean a few years from now this won’t be a stock worthy of a much higher valuation. Now that Helios and Matheson is on the map and it has made a lot of people fortunes not seen since the go-go days of the late 1990s, there will be an audience that’s looking for an encore.

I think they’ll get it eventually, especially as the core business is strong, but it’s too early and too difficult to gauge when and where to buy the inevitable pullback. I do know that HMNY stock will be a buy again soon, but we need to see the company earn its new valuation first.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/10/helios-and-matheson-analytics-inc-hmny-stock/.

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