What happened

Shares of troubled MoviePass owner Helios and Matheson Analytics (NASDAQ:HMNY) are undergoing a curious revival in Wednesday-afternoon trading, up 15.9% as of 12:55 p.m. EST. The question is why?

Last night, after close of trading on the Nasdaq, Helios made a Schedule 14A information filing with the SEC, advising that despite postponing by nearly a full month its planned Oct. 18 shareholders' meeting to approve a (probable) 1-for-500-share reverse split, it still "does not expect to have the requisite stockholder votes to approve the proposed reverse stock split" and so has canceled said meeting (which was supposed to take place today).

Children in clown costumes making curtain call.

Could this be the final curtain call on the MoviePass show? Image source: Getty Images.

So what

Why is this good news, and why is it causing investors to bid up shares of Helios and Matheson stock in response to a busted plan to reverse split the stock? I honestly don't know.

Helios had hoped that by approving the reverse split, it would be able to boost its stock price up past the $1 threshold required to maintain the stock's listing on the Nasdaq. Now that this plan has failed, management notes that "if the Company does not regain compliance ... by December 18, 2018" (i.e., if shareholders don't suddenly decide to bid up its stock price by more than 50 times for no good reason), "the Company may be afforded a second 180-calendar day period to regain compliance" (or it may not be so afforded).

Now what

And failing such an act of grace from the ruling authorities at the Nasdaq, Helios and Matheson "securities will be subject to delisting" from the exchange, making them much harder to buy (which would presumably add pressure to the stock price).

So why is "MoviePass stock" on the rise today instead of falling as shareholders sell in a panicked rush for the exits? My best guess is that investors who've enjoyed the opportunity to make money shorting Helios shares in the past may see the window for continuing to do so slamming shut. Today's "rally" in Helios and Matheson stock may be no more than shorts buying back stock and closing out their short positions before it's too late.

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