MoviePass' parent company threw a Hail Mary to raise its stock price — but it already seems to be backfiring

Business Insider

  • MoviePass shareholders authorised a 1-for-250 reverse stock split this week designed to get the company’s stock price above $US1.
  • The move could help its parent company – Helios & Matheson – avoid being delisted by Nasdaq, if it can get its market cap above the $US50 million minimum.
  • Shares crashed more than 30% when they opened Wednesday following the reverse split.

Helios & Matheson, the parent company of MoviePass, threw a Hail Mary on Tuesday, performing a massive 250-for-1 reverse stock split to get its stock price above the Nasdaq’s minimum requirement of $US1.

The reverse stock split, which it received authorization for at a special meeting on Monday, skyrocketed its stock price to $US22.50 per share – 250 times Monday’s closing price of $US0.09. However, it quickly sank 35% when markets opened Wednesday, hitting a low of $US13.18.

While the stock is still trading above $US1, Wednesdays’ slump means it will be even harder to raise its market value to Nasdaq’s minimum $US50 million requirement. It is currently valued at just $US26.28 million.

The company also received authorization from shareholders on Monday to increase its number of outstanding shares from 500 million to 5 billion. This would allow it to raise more money, but would not raise the market cap because it would dilute the ownership percentage of other investors.

“Nobody gets diluted more than I do during all this dilution,” CEO Ted Farnsworth – who owns 2.14% of the company – told investors at the meeting, but provided no context on when the company may offer new shares.

HMNY has to keep its stock price above $US1 for 10 consecutive business days before December 18, 2018 in order to regain compliance with Nasdaq’s regulations, according to the notice it received on June 21.

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