Genius Brands International Inc (OTCBB:GNUS) Hesitant After Reverse Split
Genius Brands International Inc (OTCBB:GNUS) effectuated a 1-for-100 reverse split a couple of months ago and its performance since then hasn’t been the definition of consistent. It fluctuated a lot between $2.80 and $3.15 in May, but then, at the beginning of June, it made an explosive run and climbed above the $4 per share mark.
Unfortunately, it failed to remain there for long and it fell back down. Last week, it sank below the $3 per share barrier and if yesterday’s performance (GNUS lost another 3% while shifting nearly $1.5 million worth of shares) is anything to go by, it’s going to have a hard time getting back to its former glory.
The most baffling thing about GNUS‘ erratic chart movement is, perhaps, the fact that there aren’t any immediately obvious reasons for it.
There are no promotions running for the stock, and, on the whole, the company looks like a relatively solid OTC enterprise (which, as you probably know, is not something you see every day).
GNUS issued a fair amount of press releases over the last few months as well and they all sound optimistic. They recently announced a partnership with Comcast and the famous Warren Buffett said in an interview that he is a fan of their educational videos.
Even when you take a look at GNUS‘ latest 10-Q, you’ll see that it’s not too horrific. Here’s a summary of the figures recorded on March 31:
- cash: $992 thousand
- current assets: $2.1 million
- current liabilities: $2.8 million
- revenue: $176 thousand
- net loss: $854 thousand
Sure, there are some problems like the 76% year-over-year drop in revenues and the $642 thousand working capital deficit, but it seems that they are trying to sort things out. They say that the decline in the sales is due to the general shrinkage in the DVD and CD market. With new digital distribution channels in place, the shareholders can hope that this problem will be taken care of.
They also completed a $6 million private placement back in May which, the company says, should mean that cash won’t be an issue over the next couple of years.
All in all, it looks like GNUS might just prove itself to be a serious investment. The erratic performance displayed over the last three months, however, suggests that it’s not risk-free. Hopefully, the company will be able to come up with some cold, hard figures that will show us the progress they’ve made.
Until then, doing your due diligence and carefully considering all the risks is extremely important.
The people who failed to spot the red flags around CYNK Technology Corp (OTCMKTS:CYNK), for example, ended up losing more than 50% of their investments yesterday. The mood is quite a bit different at Vape Holdings Inc (OTCMKTS:VAPE)’s camp. Apparently, the appointment of a new CFO was enough of a reason for investors to trade more than $8.8 million worth of shares in just six and a half hours. In the meantime, VAPE gained a whopping 49% and finished the day at $3.10 per share.
