Genius Brands International Inc (NASDAQ:GNUS) has skyrocketed since the beginning of 2020 as the company just keeps on giving to Bullish investors. With a tidy market cap of $763m the companys simple game plan has proved an effective business model for exponential growth. The company creates multi-media animations and licenses them to retail channels and firms across the globe. The stock peaked investor interest in yesterdays day of trading, closing on a 94% gain – almost doubling the stock price in a single day of trading. These recent volumes have been incredibly high, however the interest to short the companies growth are also beginning to peak the Bears interest. With such strong growth over the past month, some bears have picked the stock to come to a crashing halt. So to let’s dissect this further.
GNUS’s astronomical COVID-19 growth
Coming into COVID-19, Genius Brands was a stock that investors were avoiding. However, it seems investors cannot get enough of GNUS, as the bulls caused a 2400% rise in a month. To most, GNUS COVID-19 screams of a pump and dump. However, Genius brands are not new on the scene. GNUS went public in 2009 but suffered a severe decline ever since. The volcanic market activity could set GNUS on the bullish path for a while. Thus, the question on every investor’s mind is whether the astronomical rise represents business growth or speculation.
To answer this question, let us look at GNUS’s significant achievements over the past few months. In the book department, GNUS sold over 30 million copies of Llama Llama across 60 countries. GNUS’s strong sales from licensing are seeing Llama Llama enter season 2. Ultimately, providing investors with promising revenue growth.
Also, Genius Brands marketing coverage is insane. Genius brand broadcast their cartoon channel on Amazon Prime, Apple TV, Alibaba, and many more. The company endorses many celebrities to help build invaluable trust in their cartoons. For example, Arnold Schwarzenegger in Superhero Kindergarten and Jenifer Garner in Llama Llama.
However, Genius brands do not depend on their partnerships for success. The children’s company created its own network – Genius Brands Network (GBN). GBN allows GNUS to reach over 100 million U.S. households. GNUS has effectively marketed their company across the entire globe. Overall, the management at GNUS is absolute geniuses (pun intended). Thus, I would say buyers initially got in because of the strong business potential. However, the more recent buying more likely represents investors riding the trend.
Does Genius have room to grow or will the Bulls reign end?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Whether or not the company has great internal indicators, when we witness companies experience exponential growth in short periods of time it does ring alarm bells for long term shareholders. The ideal stock for a long term shareholder sees a nice 5-10% growth for the year and maybe pays a comfortable dividend to top it all off. However, we are currently in a time where the biggest factor driving the markets is the unknown. Genius has seen some phenomenal growth which in my opinion is not linked entirely to the unknown. We have here a strong company with promising news which should benefit long term shareholders.
Considering the dynamic nature of this company and it’s ability to run at almost full capacity during a pandemic – really makes this company something quite special. YIG often talks about how COVID-19 will force the economy to change. And companies like Netflix, Amazon and Genius will be the ones to thrive in years to come (opinion not advice). For investors looking to get in now, it all comes down to that decision whether you are looking to ride with the bulls for a few days/weeks and sell. Or are you looking for something more long term, if so I would use this inevitable bearish pullback to enter and hold as this company has plenty of success coming.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick Mcloughlin, Senior Management and Tyger Fitzpatrick, Current Founder