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3 Reasons Why Nasdaq’s Black Sheep is Now Millennials’ Favorite Stock

Last Updated September 23, 2020 1:58 PM
Mark Emem
Last Updated September 23, 2020 1:58 PM
  • Genius Brands was set to be delisted from the Nasdaq in August. It now has a new lease of life.
  • On Robinhood, it is the most popular stock of the last month.
  • Short interest in the stock has also inevitably increased.

The stock of kids entertainment company Genius Brands International (NASDAQ: GNUS) is the flavor of the month on millennial trading app Robinhood.

Over the past month, the number of Robinhood users holding the stock has grown from just over 26,000 to more than 110,000.

Consequently, the stock has clinched the title of the most popular stock on the commission-free investing app beating other millennial favorite stocks such as Tesla (NASDAQ: TSLA), Walt Disney (NYSE: DIS), and Amazon (NASDAQ: AMZN).

Genius Brands
GNUS has been the most popular stock on Robinhood in the past month | Source: Robintrack 

This marks a drastic change of fortunes for a stock that was set for humiliation in the stock markets.

A genius resurrection?

For months Genius Brands stock had been trading for less than a dollar. In September last year, the Nasdaq Stock Market notified the company that it would be delisted  as its stock price had been trading for under $1 for 30 consecutive days. Genius was given 180 days to comply but this period expired with the stock still trading under a dollar.

The kids’ entertainment firm received another extension in March  which would have expired in August. This time though, Genius Brands is out of the danger zone after the stock soared above $1 in mid-May.

On May 5th, the stock closed below 40 cents. The stock closed Wednesday at over $7. This is a surge of 1875% in a month.

In around 30 days, the stock of Genius Brands has surged by nearly 2,000% | Source: TradingView

So what has changed? This is why GNUS has appreciated dramatically in about a month leaving millennials with no choice but to fall in love with it:

1. Broadening Audience

At the beginning of May, Genius Brands announced that it would be merging two channels  – Kid Genius Cartoon Channel and Baby Genius TV under the Kartoon Channel umbrella.

Genius Brands
The little-known children’s media company has grown nearly 2500% since May. | Source: Genius Brands

This was to expand the distribution from the current reach of 200 million users of mobile and over-the-top devices and 100 million U.S. television households.

New platforms that have been roped in include SelectTV, RedBox, Plex, and Canela Media. The existing ones include Amazon Prime, Apple TV, and Roku.  Kartoon Channel will launch mid this month.

2. Merchandising with Walmart

Besides increasing the audience base of its visual content, Genius Brands also announced a new merchandising deal last month.

Retail giant Walmart will stock Genius Brands’ preschool toys and merchandise manufactured by Mattel. | Source: Shutterstock.com

A range of toys under preschool brand Rainbow will become available at Walmart for the first time in August . Toy manufacturer Mattel Inc (NASDAQ: MAT) will make the merchandise.

3. Genius Brands gets cash for growth

During the first quarter, Genius Brands saw a drastic decline in revenues as losses widened. This put a further strain on the company’s cash reserves.

Year-over-year revenues fell 73% in the quarter that ended in March.

Millennials love GNUS despite recording a drastic fall in revenues in the first quarter | Source: Genius Brands website 

Last month, however, Genius Brands plugged its cash gap though a direct offering of common stock. In total Genius Brands raised $47.2 million in May .

This will assist in the company’s growth initiatives such as new merchandising deals and expansion of the platforms responsible for the distribution of its video content.

Disclaimer: The opinions in this article do not represent investment or trading advice from CCN.com. Unless otherwise noted, the author has no position in GNUS stock.