Genius Brands International Inc. (NASDAQ:GNUS)'s sentiments in the market are at risk of turning sour. The Children’s media company had a third-quarter to forget as earnings and revenues fell short of Wall Street expectations. Stock dilution concern is another tailwind that continues to pile more pressure on the stock in the market.
Revenue Implosion?
A 90% decline in revenue in the third quarter all but signals all is not well in the media company. Revenue came in at just $274,000. Unlike last year when the company delivered the second season of the animated kids shows Llama 2 on Netflix, this year it was a whole different ball game as it did not have any corresponding deals.
In addition to revenue decline, shares outstanding ballooned from 11.2 million to almost 219 million. Net loss, on the other hand, narrowed slightly from a year as the company embarked on a cost cutting drive. Net loss came in at $0.01 a share. However, net loss could be much lower due to the stock dilution that took place.
ChizComm Acquisition?
Amid the revenue and earnings decline, Genius brands have moved to strengthen its long-term prospects with the acquisition of North American marketing and media company ChizComm. Geniuses Brands will essentially be merging with the largest buyer of children’s media with more than $100 million in annual aggregated media spend.
ChizComm joins Genius Brands with more than 30 leading companies and top brands in children's media. The company also boasts of close ties with media heavyweights such as Walt Disney and Google’s YouTube.
According to CEO Andy Heyward, ChizComm acquisition should help accelerate Genius Brands' growth by driving revenue and generating immediate synergies. The executive also expects the acquisition to lead to more strategic opportunities and enhance the core business.
Most importantly, Genius Brands is banking on ChizComm to help in the monetization of the Kartoon Channel, which is available for free on most popular streaming platforms. The ChizComm media should also provide additional standing as a content provider.