What happened
Actions of Great Brands (NASDAQ: GNUS) they were fired today after the company said this morning that it would hold a conference call Monday morning “to discuss exciting business development.” It was unclear what that meant, but the news sparked a lot of speculation about Twitter and a subsequent increase in stock.
After jumping as much as 71% in afternoon trading, shares were up 46% at 2:38 pm EDT.
The Superhero Kindergarten show. Image source: Genius Brands.
And that
The creator of children’s video entertainment has become a favorite of daily merchants in Robinhood and elsewhere during the pandemic, as the home entertainment provider is seen as a beneficiary of the crisis. The stock has rebounded in recent weeks when the company launched its own channel, The Kartoon Channel, and formed a strategic partnership with Arnold Schwarzenegger, who became an investor in the company and will also lend his voice to a character in Superhero kindergarten.
The stock rose from just $ 0.25 a share in April to nearly $ 12 a share in early June and has since retreated to around $ 3 a share.
Some speculated on Twitter that the company may announce a partnership with a larger entertainment company like Disney or Netflix, or that it will release better than expected subscription numbers from The Kartoon Channel. Critics also accused CEO Andy Heyward of pumping the stock.
Now what
At this point, an investment in Genius Brands is clearly not for the faint of heart. There is little track record for investors, as the company had an operating loss of $ 6.5 million last year with just $ 5.9 million in revenue. Its results for the first quarter were even worse since its income is highly volatile, depending on programming sales to broadcasters like Netflix.
The success of The Kartoon Channel could justify yet another rise in the stock price, but Genius Brands is currently valued on a purely speculative basis, trading more than 100 times last year’s sales. It’s better for long-term investors to skip this one.
