Award-winning short-seller Andrew Left has singled out Genius Brands as a grossly overvalued stock, and the Citron Research founder says investors are about to get burned.
Genius has skyrocketed by over 2,000% within a month, becoming a favorite among the millennial investors who populate Robinhood.
Novice traders might see it as a ticket to instant riches, but Citron says this investment is anything but Genius. Blasting its rise as nothing more than a “complete joke,” Left implied that shorting it would be “child’s play.”
And he isn’t alone. Short interest in Genius Brands has exploded since May, in parallel with Genius’ rise.
Based in Beverly Hills, Genius Brands is a brand management company that creates and licenses TV content for children.
Yeah, I know, that doesn’t sound like the kind of thing millennials would get excited about. Still, Genius’ stock has gone crazy since May 6, when the news that it would merge two of its preexisting channels caused its price to jump by 53%.
A week later, it announced that it had raised over $8 million in equity financing , which would be used to fund more episodes and shows for its upcoming on-demand service, which is called – I am not kidding – Kartoon Channel.
By May 14, GNUS stock had surged roughly 500% compared to where it was in January. Yet it wasn’t until the end of last month that the parabolic rally really took off.
Between May 28 and June 3, Genius stock rose another 330%. That brought its year-to-date gains to an unbelievable 2,804%.
Much of Genius stock’s rise can be attributed to electronic investing app Robinhood.
Within the past week, nearly 105,000 new investors have purchased GNUS shares , according to data from Robintrack. That’s triple the second most popular stock.
But as excited as millennial traders are about Genius – the trading platform’s average user is just 30 years old – legendary short-seller Citron Research believes it’s a dud.
Citron and its founder, Andrew Left, have a long history of identifying “terminal” and fraudulent business models, and they seem to be betting that Genius is heading for a reckoning.
Judging by his tweets, Left also believes millennials are the “lowest form of retail investor.”
That Andrew Left and Citron Research have singled Genius Brands out for short-selling is significant. In May 2019, they accused African e-commerce company Jumia of fraud , something which helped Jumia’s stock fall by 50%.
Suffice to say that investors take notice of Citron Research’s calls. And it would seem that many of them are in agreement that Genius Brands is a huge short sell.
Between the end of April and May 15, Genius shorts surged by 3,790% to roughly 3 million shares. According to S3 Partners, short interest in GNUS has exploded to 9.47 million shares since then.
Basically, thousands of millennials are hoping that a short squeeze will make them rich. Because if it doesn’t, they’re going to lose and lots of money.
And it’s not looking good for the bulls. Genius stock took a nosedive this morning after leadership registered the sale of 60.1 million shares of stock . As of the time of writing, GNUS was down a brutal 18% for the day.
So the bloodbath has begun. Millennials have piled into Genius Brands, hoping for a fast profit. But unless they’re the ones selling, they’re about to get very hurt.