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Why Genius Brands Stock Rose Today

By Joe Tenebruso - Updated Jun 15, 2020 at 3:18PM

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A big-name star is investing in the fledgling new kids' network.

What happened

Shares of Genius Brands International (GNUS 1.26%) jumped on Monday after the children's entertainment company said Arnold Schwarzenegger has agreed to become a "significant investor." At the close today, Genius Brands stock was up 8.6% after climbing as much as 20% earlier in the day.

So what

Schwarzenegger chose warrants to purchase shares of Genius Brands stock as part of his compensation for starring in and co-producing the company's new animated series, Stan Lee's Superhero Kindergarten. Schwarzenegger will lend his voice and likeness to the show, and he will help to promote it among his fans. 

Stan Lee was the co-creator of popular superheroes such as Spider-Man, Iron Man, Thor, the Hulk, and the X-Men, among many others. Fabian Nicieza, who worked with Lee and was co-creator of the popular comic book character Deadpool, is writing the script for the series. Superhero Kindergarten will launch in 2021 on Amazon.com's (AMZN -0.26%) Prime in the U.S. and Alibaba's (BABA -0.60%) broadcast platform in China. 

"I am honored to help realize Stan's vision of creating a children's cartoon series that not only entertains with superhero adventures, but also imparts valuable lessons about the importance of health, exercise, nutrition, anti-bullying, and diversity," Schwarzenegger said. 

A stock chart rises rapidly then begins to fall.

Genius Brands stock rose sharply on Monday. Image source: Getty Images.

Genius Brands did not disclose the exercise price of Schwarzenegger's warrants or the number of warrants he will receive. The company also noted that Schwarzenegger's remaining payments would likely be made in cash.

Now what

Genius Brands stock could also be rising due to excitement surrounding today's launch of its new digital network, Kartoon Channel! The free, ad-supported service was slated to become available to more than 100 million U.S. households and 200 million mobile devices on June 15. 

Questions remain about whether the stock price has risen too far too fast (shares are up a staggering 1,600% so far in 2020), but if the company can continue to bring on stars of this magnitude and sign distribution deals with powerhouse companies like Alibaba and Amazon, it's possible that its financials could eventually catch up to its stock price.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd. and Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Genius Brands International, Inc. Stock Quote
Genius Brands International, Inc.
GNUS
$0.96 (1.26%) $0.01
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$143.18 (-0.26%) $0.37
Alibaba Group Holding Limited Stock Quote
Alibaba Group Holding Limited
BABA
$94.20 (-0.60%) $0.57

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