GNUS Stock: Why Genius Brands Is Falling Despite Marvel News

Last week was a time of hype and speculation about a coming announcement from Genius Brands (NASDAQ:GNUS) regarding a new Marvel deal. However, Tuesday morning’s press release ended up squashing the hype, and GNUS stock is taking a hit.

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Genius Brands, a streaming content network targeted at children, had teased last week about a coming Marvel collaboration. Investors had reason to be excited, too. The company has recently secured some high-profile deals with celebrities like Arnold Schwarzenegger and Shaquille O’Neal. Additionally, a partnership with booming Roblox (NYSE:RBLX) on a new series has driven hype.

However, some investors seem to see this announcement as Genius inflating hype and letting down shareholders. The press release from Tuesday morning announced a future collaboration with Disney (NYSE:DIS)-owned Marvel Studios.

Basically, the studios are coming together to celebrate the legacy of the late Stan Lee, creator of the Marvel universe. Since Genius owns the rights to the Stan Lee likeness and post-Marvel Stan Lee comic universe, the two came together for the centennial of the man’s creations. Through this celebration, Genius is lending likeness rights of Stan Lee to Marvel Studios.

Investors have reason to be disappointed, or at least doubtful. Genius Brands has fumbled on announcements before. Ironically, one previous major disappointment for investors came last summer when the brand announced its purchase of the post-Marvel Stan Lee portfolio. Many thought the purchase was overvalued. Now, some investors are fuming as the company lends these property rights to the studio that it’s directly competing with.

GNUS Stock Falls After News Release

So what else should investors know? Price moves today could be a traditional sell-the-news reaction, or genuine disappointment over the announcement. Either way, GNUS stock has taken a plunge. While last week’s tease had driven the stock up nearly 20%, those gains are disappearing now. GNUS is down by over 20% so far today.

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I still wouldn’t rule GNUS stock out through all of this news. While the company is disenchanting some shareholders, it still comes with celebrity endorsements and the Roblox partnership.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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