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Why Genius Brands Is Still Falling Today

By Rich Duprey – Jun 30, 2020 at 12:57PM

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The kids' entertainment company continues to lose ground from its early June peak.

What happened

Easy come, easy go, as shares of Genius Brands International (GNUS 5.29%) continue their fall from grace on Tuesday following the massive run-up to start the month. The stock is down 5% in morning trading.

So what

Investors got hyped on a number of operational developments by the children's entertainment company that caused the stock to surge 2,400% in the span of a month, topping out at nearly $12 a share before beginning its long descent.

Genius Brands stock now trades at nearly the level at which it began the month.

Shocked man holding head in front of falling stock chart

Image source: Getty Images.

Now what

For a company that was on the verge of being delisted, Genius Brands looked like an incredible turnaround story in the making. Its kids-oriented TV show would be broadcast on Amazon.com's Prime streaming service and toy maker Mattel would be developing toys to be sold in Walmart beginning in August.

Yet management has engaged in dilutive stock practices that allowed its new investors who injected cash into the media company to immediately profit at the expense of existing shareholders.

Analysts weren't particularly enamored with the prospects of Genius Brands, its marketing deals notwithstanding, and a short-seller had warned the stock was worth at best just $1.50 per share.

With questions still surrounding just how strong even those marketing deals are, it's not surprising Genius Brands continues its downward trajectory.

 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends 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
$0.66 (5.29%) $0.03

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