Why have Helios and Matheson Stock fallen 27% today?

What happened

Helios and Matheson Analytics (NASDAQ: HMNY), shares fell again Monday – this time by 27.6% at 1:30 pm EDT – following the announcement that the majority shareholder of a MoviePass movie subscription service is planning a new splitting of actions.

And this time, it'll probably be 500 to 1.

So what

Do not say you were not warned. Two weeks ago, I predicted that, with Helios shares sold (far) under the $ 1 share price necessary to maintain listing privileges on the Nasdaq, management should soon take drastic action to raise his courses.

Today, Helios filed a Preliminary Proxy Statement ("PRE 14A") stating that, on October 18, the SEC will be asking shareholders to vote for "a one-time share consolidation" in a 1-share ratio. . -for-2 shares up to a ratio of 1 share for 500 shares. "

Now what

With the Helios shares currently valued at around one and a half cents each, of course, a reverse "1 share for 2 stocks" division would do nothing to help maintain this action on the Nasdaq. The fact is, the very less Investors should expect a split of 1 to 67, which would allow them to barely exceed the $ 1 threshold.

And if I bet money (note: I'm definitely do not Bet the money on Helios and Matheson shares – never), I would say that the odds are strongly favorable to the management and reversion of this stock by 500 to 1. That would increase at least temporarily the stock price at around $ 7.50. even if we do not know how long it would stay there.

One thing is certain: Investors who hold stocks in this company should keep their calculator handy and prepare to divide by 500 the number of shares they currently own.

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Rich Smith has no position in the mentioned actions. The Motley Fool has no position in the stocks mentioned. Motley Fool has a disclosure policy.