As investors in MoviePass’ parent company — the Nasdaq-listed Helios and Matheson Analytics (HMNY) — have seen the value of their stakes nosedive 99.99% in recent months, two Wall Street banks have made millions in fees selling the stock.
Since last August when Helios bought MoviePass, a popular movie-theater subscription service, the company has covered massive losses by selling new shares to the public and diluting previous shareholders.
To sell these new shares, Helios has primarily employed the services of two investment banks: Canaccord Genuity, which has served as the sole bookrunner, and Maxim Group, which has served as the co-manager on several offerings.
While these banks made millions in commissions from Helios, research analysts at the two firms kept “buy” ratings on the stock as it slid, advising clients that Helios was a good deal. Neither put a “sell” rating on the stock. Both recently suspended coverage.
One retiree investor told Business Insider that he used the analyst coverage as part of his decision to pour almost $190,000 into Helios. His stake is now worth about $240.
In early October 2017, Brian Kinstlinger, a stock analyst at a small New York-based investment bank, Maxim Group, started covering Helios and Matheson Analytics (HMNY). Helios is the owner of MoviePass, a popular monthly subscription service for movie screenings, which effectively comprises the entirety of Helios’ business.
Kinstlinger’s advice to investor clients: “Buy.”
He set his price target at $20, a mark of where he thought the shares could trade in the future. That was a significant bump from where the stock closed that day at $12.98.
“We see numerous ways to monetize a large user base and drive profitability, such as movie promotions, profit sharing, rebates, concessions, data sales and advertising,” Kinstlinger wrote in his note to clients.
Kinstlinger added that Maxim’s “model assumes HMNY will need to access capital to finance the MoviePass deal and to achieve its longer-term goals.”
That much has proven true. In the first three months of this year, Helios’ losses were nearly $23 million per month. That ramped up to $40 million in May due to rapid increases in subscriber growth, and an estimated $45 million in June and July, according to Helios’ filings with the Securities and Exchange Commission.
Helios has covered the massive losses incurred by the popular movie-theater subscription service by selling new shares to the public and diluting previous shareholders.
Maxim and another investment bank, Canaccord Genuity, have been instrumental in making this possible. Helios has employed the two banks to help it raise funds on multiple occasions, typically with Canaccord as the sole bookrunner, and Maxim Group as the co-manager.
While these banks made millions in commissions from Helios, research analysts at the two firms kept “buy” ratings on the stock as it slid, advising clients that Helios was a good deal. Neither put a “sell” rating on the stock, even as the share price has cratered 99.99%. Both recently suspended coverage.
If you invested $100,000 in Helios stock on that day in October when Maxim’s Kinstlinger initiated coverage with a “buy,” your …read more
Source:: Businessinsider – Finance