Genius Brands (GNUS) Stock is one of the hottest penny stocks in 2020 when the stock spiked to $11 back in June due to the highly anticipated launch of the Kartoon Channel! Once the hype was over, the stock fell a lot and continued to trade lower due to massive share dilution.
Genius Brands CEO Andy Heyward has begun diluting the stock to raise capital, pay off debt, and acquire new assets to bolster the Genius Brands Portfolio.
One of these assets is Stan Lee Universe, a portfolio of the late Stan Lee's most valuable content. This looks like a good move for shareholders however it will affect the stock price in the short run.
Many naysayers believe that Genius Brands is a classic pump and dump stock but I'll give you a few reasons why I remain long on GNUS stock.
Streaming Content is the New Gold Rush
This year alone, many large companies like DIsney, Apple, & HBO launched their first ever digital streaming platforms to capitalize on the massive shift from cable TV to on demand streaming content.
This is a permanent shift because consumers prefer watching content on demand than waiting for TV schedules to feed drip content. Companies that produce on demand video content will make a lot of money during this decade. As long as people download the Kartoon Channel! app, there is money to be made.
Still a $350 Million Small Cap Stock
If you're looking for massive returns then small cap stocks provide more upside than large, more established companies. With such a small market cap, Genius Brands could grow into a larger company like Cocomelon, one of the world's leading kids streaming channels.
Let's say Genius Brands grows into a $1 billion company by 2021. That means the stock could trade at around $5 or more within the next 12 months. $1 billion isn't a lot nowadays so there is plenty of room to run for Genius Brands.
New Share Dilution Adds More Stability & Long Term Growth
The upcoming dilution to 400 million shares may worry some investors but I've been buying Genius Brands (GNUS) stock with a goal of acquiring as many shares as possible. Streaming content is a big market and I own several different streaming stocks like Disney, Netflix, etc. I know how profitable these companies will be in the future so I'm willing to wait on Genius Brands to start earning revenue.