HMNY the 92% owner of Moviepass is at risk of being delisted off of the NASDAQ this week for failing to trade above $1 for at least 30 consecutive days. It’s been a while since HMNY has seen their stock price above the measly 1 buck level and the bosses at the NASDAQ I am sure have likely had enough of Ted Farnsworth and his antics.
Once shareholders rejected Farnsworth plan for a second reverse split of HMNY’s shares within just a few months after the last 1 for 250 split, the die was cast for a delisting. Many believe the news of the delisting will come this week, while others are betting that the company will find a last ditch effort to save itself from this next humiliation.
My guess is that HMNY will be able to stave off delisting this week, but that if they don’t deliver a meaningful bit of news within the next 90 days they will likely head to the OTC trash bin sometime shortly there after.
My reasoning for this is the following. First, HMNY does have most of the ongoing listing requirements in order. They have enough publicly held shares, revenue, total shareholders to meet those requirements. I believe they have enough stockholders equity as well, although that one is dynamic.
The obvious requirement they are lacking is the bid price staying down in the one to two penny range. The NASDAQ hates penny stocks as they are well aware that this leaves shareholders vulnerable to the scumbags who manipulate shares with pump and dump schemes. These are ugly circumstances the NASDAQ would prefer to avoid.
That said, the NASDAQ is also well known for continuing to extend the life of certain companies if they believe it may serve their investors or serve the interests of the NASDAQ itself. Moviepass and HMNY I believe will get a stay of execution based on this motivation.
Moviepass and HMNY took such a wild ride from media darling to unloved villain in such a short period of time, the NASDAQ may well be willing to cut the company some slack to see if they can get their act together.
The company could make a legitimate argument that it has retooled itself to deliver a sustainable business plan. And if Moviepass can show some positive momentum with its new plans introduced this month, and show that it is no longer setting cash on fire like it has in the past, the lords of the NASDAQ may grant the company a 180 day extension to allow the then to come into compliance.
What is the likelihood that HMNY will come into compliance within that time period? My guess is far less than 10%. With 1.6 Billion+ Shares outstanding, it would take a Christmas Miracle to get HMNY above $1. The only way I could see that happening is if somehow HMNY started to generate enough cash to start doing a meaningful share buyback program to seriously reduce the number of outstanding shares. Or if in an extremely unlikely event HMNY could find someone to loan them a big chunk of money based on their improving fundamentals that too could cause the stock to jump past the $1 range for a extended period of time. Or a combination of those events could happen. Although that is also highly unlikely.
Another option the company is still trying to pursue is making another run at doing the reverse split. Any R/S would have to meet stockholders approval of course, and there’s no reason to believe a new R/S would receive a yes vote without a significantly improved plan, execution of that plan and a CEO change.
There is some possibility that the company could be bought out at some premium from the low price it is trading at today. The event would make the delisting irrelevant. The company leadership has indicated in the past that there has been buyout interest, however everything this company has said has been proven to be outright lies or half truths to this point. So there is no good reason to believe a solid buyout is in the offing.
The most likely scenario is that the company will get an extension from the NASDAQ and they will try to continue to turn the company around. Unfortunately, it is also likely they will eventually run out of time and end up getting delisted and moved to the OTC market. From there a lot of things could happen, ranging from going private, to later being bought out, or to eventually just go bankrupt. Only time will tell.
I am of course hoping for a Christmas Miracle. And yes I believe in Santa!