Shares of Genius Brands International (NASDAQ:GNUS) were soaring on Friday, after the company announced an agreement with Samsung. Genius Brands' Kartoon Channel! will be available for free on Samsung smart TVs effective immediately.
It's been a volatile year for shareholders of Genius Brands, but the stock is still far outpacing the S&P 500 in 2020. Today it adds to its market-beating performance. As of 11:15 a.m. EDT, the stock was up 18%. But it had traded as much as 43% higher earlier in the session.
Genius Brands has four different revenue segments, of which its advertising-sales segment is the fastest growing. In the second quarter of 2020, advertising-sales revenue grew to $70,000, up 302% year over year. This revenue is generated by displaying ads on its free channels, Kid Genius and Kartoon Channel!.
By adding a new distribution partner in Samsung, Genius Brands has a good chance of increasing viewership for the Kartoon Channel!, which only launched in June. This means more ads can be displayed and it could assist continued advertising-revenue growth. And it's why the stock was up today.
Considering Genius Brands trades at over 50 times trailing sales, it will need to significantly increase revenue to grow into its pricy valuation. Today's news should contribute to revenue growth. That said, it appears future revenue growth is more than amply priced into Genius Brands stock.
As a penny stock, it doesn't take much to make Genius Brands stock pop, as it did today. But it will likely remain an up-and-down ride for those holding for the long term.