This TabStocks article takes an in-depth look at Genius Brands GNUS to determine; is now the right time to invest?
Stock Name and Trading Stock Exchange Platform
Genius Brands International Inc. – NASDAQ (NASDAQ: GNUS)
The Stock Sector
Genius Brands International (GBI) is a content and brand management company in the entertainment sector.
GNUS is engaged in the developing, licensing, marketing and branding of children’s media products for distribution to retail channels.
The company is led by award winning creators and producers, operating in at least 67 countries worldwide as of 2022.
Genius Brands International Inc acts as a licensing agent for certain brands such as, Llama Llama, Psycho Bunny, and others.
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The company was founded by Balaban Allan in 2006 and later restructured, merging with A Squared Entertainment in 2013.
It is currently headed by CEO Andy Heyward and has its headquarters in Beverly Hills, California, US.
Recent News on GBI
Genius Brands has penned a 20-year deal with Marvel studios, this caught market attention resulting in 37% surge of the stock.
The deal involved GBI licensing the iconic Stan Lee as a feature brand for Marvel in film production and other merchandise.
GBI also reported their Q1 results last week, the stock tanked despite a good performance and revenue beat.
This is a general result of the huge sell-off by investors with fear grappling the equities market.
GBI cartoon channel launched in the Roku channel last month in April 2022. The channel, app and content were just rolled out and will be featured on Roku.
GBI also completed an acquisition in the last month. GBI bought WOW media company for approximately $53M in cash and stock options.
The deal will spur growth in the company and estimated to bring in revenues of around $64.2M.
The company has released a letter to shareholders entailing specifics of the Marvel deal.
The CEO was upbeat and stating a possibility for subsequent deals with Disney.
Entertainment companies have been known thrive even in tough times and this has been well recognized by investors.
Investors were more interested in the deal than increased numbers.
Short-selling interests in the company were significantly higher than its peers. It stood at 6.86% as a percentage of float.
This shows market sentiment has been pretty bearish on the stock.
Current Position of GBI
GBI is in a decent position at the moment despite the overall market slump. It has a market capitalization of $227.79M
Genius Brands International Inc was adversely impacted by the pandemic, being a penny stock, the crash saw it trade at nearly negative levels for months.
The GNUS stock faced the risk of de-listing from the NASDAQ during this time. However it made an astonishing comeback skyrocketing by some +2,000% in May of 2020.
This was accredited to the launch of the Kartoon channel and Mattel’s Rainbow Rangers.
The deal with Marvel to license Stan Lee usage rights has been a plus for them.
Stan Lee was a writer, producer, executive for Marvel Studios where he created the fictional world and characters via movies to comic books which gained universal traction.
His death in 2019 was devastating to many throughout the globe.
Stan Lee had a strong fan base that is still drawn to his work today. He left rights to his works POW! Entertainment which will transfer the exclusive rights to GBI.
Thankfully, the deal will recreate his works and signatures through many different ways like publishing, films and themed-parks/products. Stan’s legacy lives on, at least for 20 years.
CEO Andy Heyward expressed his enthusiasm following the deal stating that,
“He (Stan Lee) wanted his Legacy to continue with Marvel and he was proud of the relationship he has with the Walt Disney company.”
The details of the deal were not disclosed due to a confidentiality agreement with Disney, as per Heyward’s admission.
In the face of dangerously collapsing market, capital tends to flee from riskier assets to safer options.
During such ferocious bear market, meme stocks, mid-caped stocks and penny stocks like GBI are the first to get hit.
The sharp upsurge has similarly been contributed by the rapid fall in the past months. Big players have also been affected, but have been more resistant.
GBI currently has several brands including Kids Genius, Baby Genius, Rangers, and Spacepop.
It runs a number of divisions as well such as Genius Brands Music, Kartoon Channel, Sony Pictures and the Stan Lee universe.
Andy Heyward owns the majority of the stake in the company, followed by Sony pictures Home entertainment group (7%) and 32 ventures, which is its major investor.
Institutional ownership accounts for at least 19.40% of total ownership.
This includes Vanguard (4.88%), SSgA Funds (1.68%). Geode Capital (1.62%) and many more.
The company went public in 2009 and the public owns a significantly small part of the company. It has recently announced plans to begin trading on the NYSE American.
It has a staff of only 9 people with other 26 executive contacts.
It offers videos, music, books and licensing services. It also acquired Ameba TV and Chiz.com.
Its main competitors include All For One Media, Carriesoft, Wildbrain and Moonbug.
GNUS stock Price Chart
As of 23 May 2022, the stock is trading at $0.71, a -2.61% decline.
The markets are still in panic mode and this negative activity is likely to continue for a while.
The stock has traded at a day range of $0.69 -$0.71. It has hit a year high of $2.32 and a low of $0.51.
As seen above, the past few months have been rough for GBI, with a sharp decrease witnessed.
This explains the increasing interests on the GNUS stock.
The volume of shares traded for GNUS is at 6.12M.
The GNUS share price has followed the direction of the market. They have performed averagely and should not be falling as much.
The current market conditions including rising inflation, increase in interest rates and geopolitical conflicts have been a major disruptor.
The entertainment sector is an Achilles’ heel at the moment with the big players like Netflix losing nearly all of their value.
The stock is advantageous as a penny stock as it can only drop so much. The price is therefore very fair and below its peak highs.
Sentiment on GNUS
Earnings for the company was quite fair. It did surge a bit (+10%) before easing off. Investors trust that the deal is the last piece it requires to take off
The stock is up by +6.50 in the past week. It has been down throughout the year, down by -54.6%. Many believe it is on the verge of being a safe bet.
Shareholders are happy by the performance of GNUS and believe it is undervalued.
Proponents of the stock see an impending short squeeze ahead due to massive short interests in the GNUS stock.
Analyst are a relatively pessimistic on its stability but forecast positive future estimates.
Profits for GNUS
The company has not yet registered profits, but this is looking to quickly take a turn for the better over the coming quarters.
GNUS have however been growing steadily and posted amazing figures. The last earnings report was fantastic with a reported revenue of $17.96M mocking the expected $1.64M.
The March 2022 revenue was at $1.44M, a +35.43% rise. It has exploded exponentially this quarter achieving new heights.
Net income was at -$4.5M, a +94% yearly increase. The net profit margin was at -314.43%, a +95.61% rise.
Operating income was at -$98.2M, down by -46.13%. The net change in cash declined by -0.94%, recorded at $42.75M.
It ardently hoped that they will rake positive gains in the coming year.
Future of GNUS
GBI has proved to be a notch above its competitors with the recent signing. They are in liaison with the biggest players in the sector.
Although it is still a small player at the moment, it has the potential to quickly rise and become a huge player in the market.
Given the recent momentum, an acquisition of GBI is a future possibility.
They already work with Industry leaders, who it’s their prospective worth and could capitalize in an opportune time.
Even amidst market crumbles, the entertainment sector has managed to stay afloat or at least deteriorate less vigorously.
Genius Brands International Inc is now working with Marvel and this opens it up to a new world that has an unshaken following; children’s entertainment.
It is a penny stock, thus could rise dramatically with growth over the coming years. If they manage to post a profit, capital will come rushing in.
GNUS have a decent balance sheet, with a good debt to equity ratio (0.0665).
Total assets are estimated at around $174.08M. The success of GNUS is almost guaranteed if they maintain high growth levels.
Overall Verdict on GBI
The GNUS stock is at its lowest, thus a discounted buy-in.
It is looking bearish in the near-term, as is however the overall market. GNUS could withstand the recession risk as they offer very essential services.
Moving averages are neutral while oscillators suggest a sell. $GNUS is a buy, even though it could fall, it’s a less risky investment gamble due to the cheap price.
When it makes a home run, the returns will be astronomical.
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