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This News Sent Genius Brands Stock Up Almost 25% Today

By Jason Hall - Sep 2, 2020 at 1:42PM

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A deal to add some new -- at least new to its platform -- content for Kartoon Channel! got investors excited this morning.

What happened

Shares of Genius Brands International (GNUS 4.38%) surged almost 25% in pre-market trading before calming down after market open. As of 1:10 p.m. EDT, shares are up 9.1%. Today's big surge came after the company announced it has acquired the rights to episodes of two new shows -- well, new to it -- for its Kartoon Channel! streaming network. 

So what

Genius Brands is adding episodes of Pac-Man and the Ghostly Adventures, and Adventures of Sonic the Hedgehog to its programming slate. This is another addition to the company's streaming app's growing selection of content. 

Man forcing red line on chart that's falling to go back up.

Image source: Getty Images.

Yet as the market's reaction showed, the early excitement moderated, I suspect, as people realized this wasn't the addition of blockbuster, must-see programming. Adventures of Sonic the Hedgehog first aired in 1993, so it's not exactly fresh content. Moreover, it had a short 65-episode run, and received mixed, at best, critical reception. Pac-Man first aired in 2013, with 52 episodes airing over three seasons. 

Now what

Genius Brands is regularly adding more content, but to be blunt, this isn't top-shelf programming. It can best be described as "filler" that bigger networks, streaming or otherwise, wouldn't be touting in a press release. But with shares down 85% over the past three months, while the SPDR S&P 500 ETF Trust (SPY 0.00%), a good proxy for the U.S. stock market as a whole, is up 14%, any good news helps, right?

GNUS Chart

GNUS data by YCharts

The bottom line is Genius Brands is still a very, very small entertainment brand, and its financial track record is littered with big cash burn and evaporating shareholder equity. Whether Kartoon Channel! and the new programming that it is working to develop, along with continued success of its modest hits like Rainbow Rangers, will allow it to transition from money-burning to profits remains to be seen. 

Here's the blunt reality: Genius Brands is issuing press releases touting the addition of decades-old, second-tier content to garner attention. If that gets you excited about its prospects, it might be time for a reality check

Jason Hall has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Genius Brands International, Inc. Stock Quote
Genius Brands International, Inc.
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