Two of the biggest short and distort traders are back following their old playbook. Citron and Hindenburg both came out with hit pieces this month and said that Genius Brands stock was heading to $1.
$GNUS to $1…fast The lowest form of retail investor. Consider: LTM $GNUS rev $5 mil mkt cap $800 mil compare to leader WildBrain (teletubbies) LTM revenue of $332 million mkt cap $175 mil Not to mention massive dilution at $GNUS. Stock Promotion
— Citron Research (@CitronResearch) June 4, 2020
Genius Brands stock had just made new highs above $11 before Citron’s tweet and has crashed to just under $3 at the time of this writing. This is Citron’s playbook. The last stock they executed their strategy on was Inovio Pharmaceuticals. We told our readers at the time to ignore Citron and focus on the big picture. As a result of Citron’s report, Inovio stock dropped from $19 to a low of $5.13 a share. Our subscribers are now sitting on big gains as Inovio stock has climbed back to above $14.
This how Citron makes money. The find a running stock. Go short the stock, put out a hit piece within a few hours of filling their position, cover after the stock collapses, bank profits, and move on to the next stock. Rinse and repeat over and over again. Just like with INO stock, Citron had the same effect on Genius Brands stock.
The goal for Citron is to scare the weak longs into selling and drive the share price down. While we are not going to get into whether it’s illegal or not (should be), it is certainly immoral. However, like us, Citron is protected by the First Amendment and has freedom of speech. The key to Citron and Hindenburg is that once you know their playbook, there’s a lot of money to be made buying the dips. There’s a reason Genius Brands stock was $11. And now with Genius Brands stock under $3, it’s a discount entry opportunity. Here’s why.
About Genius Brands Stock
But first up, here’s a little background info for those that aren’t familiar with Genius Brands International. Genius Brands International, Inc. is a leading global kids media company developing, producing, marketing, and licensing branded children’s entertainment properties and consumer products for media and retail distribution.
The Company’s award-winning ‘content with a purpose’ portfolio includes Stan Lee’s Superhero Kindergarten, starring Arnold Schwarzenegger; Rainbow Rangers for Nick Jr.; Llama Llama, starring Jennifer Garner, for Netflix; award-winning toddler brand Baby Genius; adventure comedy STEM series Thomas Edison’s Secret Lab; entrepreneurship series Warren Buffett’s Secret Millionaires Club; and Stan Lee’s Cosmic Crusaders, created with Stan Lee’s Pow! Entertainment (POWN).
Through licensing agreements with leading partners, characters from Genius Brands’ IP also appear on a wide range of consumer products for the worldwide retail marketplace. The Company’s Genius Brands Network of channels, including Kid Genius Cartoon Channel, Baby Genius TV, and Kid Genius Cartoons Plus!, are available in over 100 million U.S. television households via a multitude of distribution platforms, including Comcast, Cox, DISH, Amazon Prime, Sling TV, Apple TV, Roku, Amazon Fire and more. For additional information, please visit www.gnusbrands.com.
CEO Andy Heyward’s Response
We highly recommend everyone to read CEO Andy Heyward’s response to Citron and Hindenburg here. This is a CEO who is going to fight for his shareholders and is not going to take this criticism lying down.
It is also important to keep in mind how these short sellers make money and what they are trying to do. Make no mistake, their intention – and indeed how they make their money – is to manipulate the stock price of companies like ours in order to profit at the expense of other shareholders. Their interests are directly opposed to shareholders’ interests. In contrast, as one of the largest investors in the Company myself, my interests are fully aligned with those of my fellow shareholders – and will remain so.
Consider that Genius Brands stock current market cap is just $295 million. The company has over $45 million in cash and only $9.75 million in debt.
Big Names Jumping On Board
Genius Brands just added Margaret Loesch as Executive Chairman of Kartoon Channel! (former President of Marvel Entertainment, FOX Kids, and Henson Television), and David Neuman as Chief Content Officer of Kartoon Channel! (former President of Walt Disney Television). Margaret was founding CEO of FOX Kids and built it from zero to the most successful and profitable kids program service, and what was eventually sold to the Walt Disney Company for $5.5 billion dollars.
The Schwarzenegger Effect On Genius Brands Stock
The biggest name jumping on the Genius Brands stock train is Arnold Schwarzenegger. Arnold is now a significant investor in Genius Brands stock after electing to receive warrants to purchase shares of the Company’s common stock as an advance against his profit participation in the new animated children’s series, Stan Lee’s Superhero Kindergarten.
Created by Stan Lee as one of his final projects, Stan Lee’s Superhero Kindergarten, which will premiere in 2021 on Amazon Prime in the U.S., is co-produced by Genius Brands with China’s Alibaba Group, Lee’s POW! Entertainment, and Schwarzenegger’s Oak Productions. Schwarzenegger, who also serves as executive producer, lends his voice as the lead character in the series.
It’s important for Genius Brands’ shareholders to realize the effect Schwarzenegger could have on the company. If anyone doubts star power, look at what Oprah Winfrey has been able to do for Weight Watchers’ parent WW International. Arnold is a big fan of CEO Andy Heyward and had this to say:
“Andy Heyward is one of the industry’s most respected producers of children’s programming and working together we will be able to bring to life our shared vision of ‘content with a purpose,’ which parents can enjoy alongside their children while taking comfort in the moral and educational focus.”
Netflix or Disney?
Before Citron and Hindenburg attacked the company, our subscribers got in before the big move to $11 as we at Insider Financial speculated that Disney or Netflix would buy Genius Brands. As we said earlier this month:
Consider the shows in development and the depth of characters in the Genius Brands International portfolio. Disney bought Marvel for $4.2 billion. CEO Andy Heyward is following the Marvel playbook. We believe it’s only a matter of time before either Disney or Netflix buys Genius Brands International.
With Schwarzenegger now on board, we are even more bullish on our thesis.
It’s unfortunate that the SEC still allows short and distort reports to be published. However, instead of complaining, the best bet for the bulls is to understand the game and trade accordingly. All the weak longs that got spooked by Citron and Hindenburg can now pick up cheap Genius Brands stock as a discount entry opportunity. For those with a long-term time horizon like Andy Heyward and Arnold Schwarzenegger, the dip is a gift from the trading gods.
As always, good luck to all (except the shorts)!
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Disclosure: We have NO position in NASDAQ:GNUS and have NOT been compensated for this article.