$GNUS is up 31% so far today on its toys.
I was always bullish of this kids’ content brand doing well in the toy sector. Its Rainbow Rangers brand is very recognizable.
After four years of development and production, Genius Brands International, Inc. announced today the debut of the first toys from Fisher-Price, a division of Mattel, Inc. These toys from the hit original preschool series, Rainbow Rangers, are now available at Walmart stores across the U.S., Walmart.com and Amazon.
Chairman and CEO Andy Heyward said in a statement, “The Rainbow Rangers brand has all of the elements to potentially become a breakout hit and a huge business for Genius Brands.”
The “Team Rainbow Rangers” multipack (MSRP: $24.99, ages 3+) features characters—Rosie Redd, Mandarin Orange, Anna Banana, Pepper Mintz, Bonnie Blueberry, Indigo Allfruit, Lavender LaViolette and Floof—from the popular Rainbow Rangers series.
According to the Motley Fool who mostly just criticize this brand and stock, the toys appeared to be sold out online despite just launching on Walmart.com and Amazon over the weekend.
The stock shot up to $11.70+ briefly in early June 2020. It has been a heartbreak for day traders, with the stock recently well below $2 dollars.
The current price after the news bump is around $1.90 and the stock is likely to drop below the $1 dollar mark in August. However this pump-and-dump rally is much smaller than it should have been, due to repeated PR attempts by the company that didn’t reward investors.
However with better financial news in the months and years ahead this kids’ content stock still has a lot of potential. We think it’s a good deal around the $0.85 mark. We believe it’s still overvalued anywhere near $2.
The toys could also sell well in China where the program airs on CCTV. Rainbow Rangers is a likable brand. Each unique and diverse character represents a superpower: super strength, music power, animal whisperer, invisibility, super vision, super speed or micro-power!
The launch of the Rainbow Rangers toys is supported by a comprehensive national advertising and promotional campaign, including television advertising, widespread social media and influencer programs, a customer appreciation initiative, new content, and more.
Genius Brands have a PR that has been misleading day traders into a situation of over-hype based on the actual lack of profitability of the business. However with Disney in misery and Netflix frozen in good content, kids content could have a significant opportunity during the school shutdowns and hybrid digital learning we are seeing in many States.
The stock $GNUS was around $0.30 cents in the spring of 2020 and not much has fundamentally changed, even with the Kartoon Channel launch and the nice toys. The business still will take many years to scale and any buying above $1.00 and certainly above $1.50 should be avoided at this point.