VIEW ONLINE Thousands of investors got creamed trying to snatch cheap shares of MoviePass' parent company during its epic meltdown
As shares of Helios and Matheson Analytics — the parent company of MoviePass — plunged toward zero this summer, investors on the free trading app Robinhood kept piling in to the stock.
Facing a crunch for cash in July, with its share price already below $1 and at risk of being delisted from the Nasdaq stock exchange, Helios, which trades with the ticker HMNY, pulled a Hail Mary. With approval from shareholders at a specially called meeting, management executed a reverse stock split, condensing every 250 shares owned by investors into one.
At the time of the reverse split, about 23,000 investors held the stock on Robinhood, weekly data compiled by Business Insider shows. But shares started crashing before markets could even open on the day of the split.
That didn't faze investors on Robinhood. Throughout the decline, they were still piling into the stock, according to weekly data compiled by Business Insider. By the time the stock's value was back down to pennies in August, more than 73,000 investors owned the stock on the app.
Robinhood put an end to the madness on Monday, when it stopped allowing new purchases of HMNY. Holders could still sell their shares, but no new investments could be made into the stock there. It's unclear when exactly those tens of thousands of investors bought the stock, but without any significant upticks in its price throughout the decline, there's a slim chance for them to have made a profit.
Robinhood isn't the only place where investors lost money. Business Insider's Nathan McAlone spoke with a retiree who described losing more than $100,000 betting on Helios when analysts on E-Trade rated the stock a buy. E-Trade has not discontinued the stock.
Asked for comment, Robinhood pointed Business Insider to an email it sent to customers about its ending of new purchases.
"In order to protect our customers from the risks associated with some low-priced stocks, we remove the buy option for stocks like HMNY that consistently trade under $0.10," the email said.
Shares of Helios are now down almost 100% from their all-time high in October, shortly after the firm acquired MoviePass. Adjusted for the reverse split, shares were worth $8,225 at the peak. The stock is now worth $0.03.
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