Shares of Genius Brands International (NASDAQ:GNUS) are down 9.2% at 12:59 p.m. EDT on June 22.
This marks the continuation of a sell-off that started in early June that's erased more than 66% of the company's value over that time.
The sell-off started on June 4, when the company disclosed in an SEC filing that investors owning 60.1 million shares had registered to sell those shares, purchased in the form of warrants that could be exercised at only $0.21 per share. At the time of the SEC filing, Genius Brands' shares traded at an all-time high, above $7.50 per share.
Since, the company's stock price has steadily declined on very heavy volume:
The company didn't issue any new press today (or over the weekend) or any new SEC filings. And with the S&P 500 up modestly today, it's likely that today's decline is being driven by the usual catalyst in this case: Sellers are setting the market, offering shares for sale, versus buyers making offers to buy and driving prices higher.
Genius Brands has become a bit of a battleground stock. Bulls are convinced that it could be the next big media stock, touting its new Kartoon Channel! and potential hits like Stan Lee's Superhero Kindergarten, and the modestly successful Rainbow Rangers as proof of a bright future.
Bears, on the other hand, point to the massive difference in its stock price and the price the company issued those shares for, along with Genius Brands' long history of unprofitability -- it has never earned a profit in its more than a decade of operation -- as evidence that the massive bull run is going to go bust.
So who's right? Well, bears have certainly proved correct over the past three weeks as the stock price has come back down to earth. Moreover, there's also a very long track record of poor financial performance to back up their predictions that the company is a losing investment:
The question investors have to ask themselves now is whether Genius Brands has finally turned the page from its past. Kartoon Channel! is being led by two kids TV veterans with a lot of success, and Arnold Schwarzenegger and John Landis are now attached to Superhero Kindergarten.
Genius Brands has no debt, and has secured what it says is enough cash to continue content development for several years without raising any more money. If the company can manage to get a hit or two over that period, it could be a big winner.
But if it doesn't, investors will likely see their capital end up more Lost than Brewster's Millions. As things stand today, there's just not much to go on besides being willing to bet one way or the other, and accepting the risk of losses if things don't pan out.
One last word of warning: With a market capitalization of less than $260 million at recent prices, Genius Brands International stock is very subject to potential manipulation. A rumor on social media of a potential buyout could affect its share price much more than that of a multi-billion-dollar media company. So consider all of the implications before you buy shares of this battleground micro-cap.