Headlines Opinion

Genius Brands Stock Is Cratering Because the Stan Lee Deal Is Hot Air

Genius Brands' surprise announcement turned out to be a complete dud. Given the stock's messy history, why is anyone shocked?

  • Genius Brands announced a new partnership with Stan Lee’s POW! Entertainment.
  • The company acquired a portfolio of low-value assets from a dead comic book writer.
  • Don’t fall for the hype. This stock is still a dud.

Last week, Genius Brands chairman and CEO Andy Heyward promised an “exciting business development” that would be announced today, July 6. It was a classic case of overpromising and underdelivering. The stock is down a whopping 18% as of midday trading on Monday.

While Genius Brands speculators should be used to taking massive losses on their terrible investment, the pain is just beginning. Here’s why the new Stan Lee deal is just baseless hype.

Mr. Market isn’t impressed with the new Stan Lee deal. | Source: YCharts

Genius Brands Hypes Stan Lee Deal, But Investors Aren’t Falling for It

Genius Brands entered into a joint venture with Stan Lee’s POW! Entertainment to create a new network called Stan Lee Universe.

The network will have worldwide exclusive rights to Stan Lee’s intellectual property creations past, present, and going forward.

Genius Brands’ management is going to great lengths to hype the partnership. CEO Andy Heyward lays it on thick, stating the following in a Monday press release:

When we looked at the depth of these creations that sit in this library, the magnitude and value of this asset slowly began to sink in. There simply is no greater treasure chest of Intellectual Property anywhere.

He goes on to elaborate:

I feel like we went down to the basement of John Lennon and Paul McCartney’s recording studio and found 200 songs that had never been released. In all of Hollywood, there is no greater prize. This is the Holy Grail.

There’s a Big Problem, and It’s Staring Investors Straight in the Face

Disney purchased Stan Lee’s lucrative Marvel portfolio years ago. | Source: Tinseltown/Shutterstock.com

While Stan Lee is certainly a comic book icon, credited for the creation of timeless brands like Spider-Man, the X-Men, Iron Man, and Black Panther, he has been deceased since 2018. This means he will not be creating new intellectual property for Genius Brands.

Lee’s remaining IP trove leaves much to be desired. While he never received a dime, his lucrative IP portfolio from his time at Marvel went to Disney in 2009 as part of a $4 billion deal.

That means Genius Brands will be getting a portfolio of leftover, bottom-shelf intellectual properties that Disney didn’t see fit to buy after acquiring his Marvel characters.

The titles include Stan Lee’s Tomorrow Men, Virus, Black Fury, and Stringbean. Yes, Stringbean – I can see why Disney left these assets on the table.

Maybe a gritty Tomorrow Men adaptation would pique the interest of 30-something comic book diehards, if only for the Stan Lee connection.

Unfortunately for GNUS shareholders, Stan Lee will have little-to-no brand recognition in the children’s audience that Genius Brands is targeting. This makes the IP effectively worthless.

Get Ready for More Dilution

Genius Brands’ share count has been expanding dramatically as management takes advantage of low-information investors by selling more shares. | Source: YCharts

By now, investors should have noticed that Genius Brands loves to issue new shares and dilute investors.

It’s the only way the company can stay in business amid its massive losses.

Be on the lookout for another capital raise following the new Stan Lee deal.

Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author has no position in any of the stocks mentioned.

Last modified: September 23, 2020 2:02 PM

William Ebbs

As a writer with over five years of financial experience, William Ebbs has earned millions of page views with his hard-hitting, opinionated work. When Will isn't writing, he enjoys strategy gaming, world travel, and researching for his next article. William Ebbs is based in the United States of America. Email me | Follow Me on Twitter | Link up with me on LinkedIn