GNUS-06-03-2021

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Today I want to talk about ticker GNUS, Genius Brands International, my thoughts and feelings about GNUS, and its future, as a company, and as a stock. I've been sitting on shares for this thing for a long time, and held off writing about it until now, because things are changing, and I feel it's time to discuss it.

GNUS, Genius Brands International has a little bit of a reputation as a "meme stock". "Meme stocks" are popular on social media, especially Reddit, and attract a lot of attention there. This title almost seems unwarranted though, since whenever it is shilled on reddit, the marketing never seems to stick. This is because mostly back in June of last year, there was a huge pump and dump up to 11$, and another to 3$ or so earlier this year in January. This volatile hard movement of the stock has both pushed people away, and pulled people in, so lots of controversial attention because of that.

These 'pump and dump' situations came about with breakout news from the company, as CEO Andy Heyward hypes news about negotiations with Marvel, or the acquisition of rights to Stan Lee's likeness, and intellectual property. These hype trains got out of control, partly because of Andy's own over-hyping of the events, and because of some degree of (IMO) market manipulation by hedge funds who enjoy shorting the stock, and punishing retail investors who buy into the hype. Most of their action is considered legal, publishing bearish articles, promoting them, and shorting the stock are no issues, but there have been many retail investors notice suspicious social media activity during the bear runs, including aggressive spreading of unconfirmed, lies and fake news about GNUS or Andy Heyward, from the company being a Ponzi scheme, to Andy ripping off the company's landlord for rent. Genius Brands is debt-free, with $140 million in cash, primarily for acquisitions, and they did acquire a good amount of that cash if not all of it, from investors, and share dilution - which has happened only once.

To be up front, there is a chance dilution could happen again, if required to get the company through the next two years, which is slated to be their 'self investment phase' where they buildout their revenue producing assets and start to market themselves hard.

A lot of time has passed since those past events, and a lot more has happened to GNUS to put it into a much better position now. Genius Brands has made an acquisition with Chizzcomm media, a marketing firm headed by Harold Chizick who founded the company in 2013 after he left work for Spin Master (TSE:TOY) as a head of marketing and communications. Chizzcomm is a proven, profitable company that stands on its own 2 feet, and they have added accretive revenue to the GNUS revenue stream already in Q1 2021. Revenue for Q1 was up 200% approximately, over previous years, almost entirely due to Chizzcomm, however, GNUS has more acquisitions to make, and they also have new shows, especially Superhero Kindergarten, and their new streaming app Kartoon Channel!, and these are both showing signs of great success already, so we do expect to see something from these on the next revenue report, through advertising sales.

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The company has been hitting another bull run recently, with a high of just over $2 on Tuesday, June 1st 2021. This bull run began with the release of Superhero Kindergarten, starring Arnold Schwarzenegger, and Arnold appearing on Jimmy Kimmel Live! and on the Kelly Clarkson Show, to promote his new cartoon.

Since this bull run began, Andy Heyward has apparently been doing his best to indicate to the world that GNUS is ready to prove they have somethings worth talking about now, and that the company is ready to start performing. Andy made a number of announcements from day to day, and some of it is fluff talk, but some is revealing about the company's direction in a few ways.

We have official announcements about season 3 coming for Rainbow Rangers, and news that Superhero Kindergarten and Rainbow Rangers will be airing on Netflix, and Amazon Prime, as well as in China on Alibaba's new kids streaming platform, Youku.

Andy made official promotions of his staff, through investor news, to highlight the achievements of these members. Harold Chizick was officially appointed the head of marketing for GNUS, and he will personally serve Genius Brands and represent both GNUS, and Chizzcomm, and this indicated the start of a larger marketing campaign to promote Kartoon Channel! and Genius Brands worldwide, as advertising picked up for the channel, and the new show, on social media, and TV (With Arnold's interviews). They used Arnold's star power to gain cheaper exposure on prime time television this way.

Jon Ollwerther was promoted as head of Kartoon Channel! management, and this should be considered a sign of his accomplishments - announced only 2 days later, Kartoon Channel! added new content through partnership deals. Most of this content is old classic cartoons, some most of us adults today will remember from childhood, along with some very recent content from The Wiggles, in a partnership with ABC Australia - This is big deal IMO, as the Wiggles are global phenomenon, and at this time there is no way to access the Wiggles content without first paying a subscription fee to Netflix, or AppleTV, or etc. The Wiggles World (2019) series will be airing soon on Kartoon Channel!, free to access, and I expect that to be a strong piece of content to bring kids and families in, and keep them coming back to the service.

Even more recently, GNUS has officially announced partnership with Never Wrong Toys, and CEO Eva Wong as the toy partner for Rainbow Rangers. This is not incredibly new news, because we already expected Jan 2022 for Rainbow Rangers toys, and that part of the announcement was not exciting. But what's interesting here, is that Never Wrong Toys is another new startup, as of 2018, and the CEO Eva Wong is also an ex employee of Spin Master where Harold Chizick used to work. Furthermore, Chizzcomm has already been working with Never Wrong Toys as a client, promoting their Laser Pegs brand.

Genius Brands and Andy Heyward were also featured in promotional content for investors, just today, which can be rewatched here. In this interview he mentions creating an umbrella company for the Stan Lee Universe to manage the Stan Lee, and related, assets. He mentions a lot of things we've heard before, but it does bring new investors up to speed, including discussion about the next expected releases from Genius Brands for OC, such as Shaq's Garage, also expected to be a big hit, Shaq is a surprisingly successful guy, and the new show has a "Cars" feel to it.

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KC! Pop Quiz is also coming very soon, talked about briefly in the above presentation. It looks like they have hired ex-Nickelodeon child star Kacey Simpson, to host the show. Here is a teaser for it, where Kacey promotes the show, and reaches out to the public for contestants interested in appearing in the show. We also expect great things from here.

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The company obviously has a lot going for it that could thrust it into a strong position as a market disruptor. The company is an excellent acquisition target, but that is not the intention of Andy Heyward this time. Andy has a history of selling every company he makes, but this time is different. I believe he is looking to build a legacy, and has major goals and dreams. Some of this hidden intent can be inferred from comments by Harold Chizick regarding the acquisition of Chizzcomm by Genius Brands, in this podcast interview with Chizick.

The stock is a whole other ball game though. This stock is getting a lot of attention, good and bad. The stock has been a very heavy target for shorting for a long time now, and now that this most recent bull run has made a very fast hard hit against the $2 mark on Tuesday, shorts have revealed their positions once more, and began launching hundreds of thousands of sell orders right at the $2 mark, and at the $1.87 resistance line, as of today (Thursday, June 3rd). We have seen gains, and losses, due to our correlation with AMC, which is extremely volatile right now because of a short squeeze. We cannot expect a short squeeze on GNUS, due to volume, and because the majority of retail traders that fight against short positions to chase squeezes are all on AMC, GME, and BB. It's not desirable either... GNUS is moving largely by its own merits at this time, and I would hope to see it stay that way. As for price movement, I cannot predict the future obviously, but I have bought $2 calls expiring in two weeks, so my own position is to hope to see the stock break the $2 barrier solidly, and build resistance above it. However, I feel the closer we get to $2.5, or $3, the greater the risk of a large sell off of shares, followed by another bear run. The less volatile it is right now, the more likely it is to stabilize and preserve value.

This is not financial advice. You must exercise caution when investing, and speak to a financial advisor before doing anything insane. Basically, don't ever blame me for you buying high and selling low.