PreMarket Prep Stock Of The Day: Genius Brands

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Not all stocks are participating in Friday’s melt-up in the markets. In fact, one issue is deep in the red after trading much higher earlier in the week. That stock is Genius Brands International GNUS, making it the PreMarket Prep Stock Of The Day,

The Pop

During the first two sessions of the week, Genius Brands rallied from last Friday’s close ($2.05) to $4.02 on steadily increasing volume with no news out on the issue. The move accelerated in the same fashion Wednesday on even more volume to $7.93.

The struggling children's entertainment company is expected to launch “Kartoon Channel” on June 15, which was formed from the merger of its two existing channels into a new digital network.

What may have caught investor’s attention was the statement that “will be available in over 100m US television households and over 200m mobile devices." It will also stream on Amazon Prime Video and Apple TV.

Double Whammy Sends The Issue Into A Tailspin

Just as the issue was trading near its high for the session, the company released an SEC filing noting a resell by existing shareholders of up to 60.1 million shares of common stock. That's not what investors wanted to hear after the sudden massive run-up.

See Also: Citron On Genius Brands: 'The Lowest Form Of Retail Investor'

While the issue was in a freefall, short seller Andrew Left called the company the “the lowest form of retail investor” and predicted a plunge to "to $1...fast."

After much higher open on Thursday ($9.53) versus Wednesday’s close ($7.93), the continuation rally took the issue to $11.73 and then sharply reversed course in a big way. The ensuing decline took the issue to $4.25 before ending the session at $6.86.

After The Dust Has Settled

In Friday’s session, it's a battle of the bulls versus the bears. After a lower open, it continued in that direction but found support well ahead of Thursday’s low ($4.25) at $5 and rebounded to go from deep red to slightly green, when it reached $7.35. As of noon, it's trading below Thursday’s closing price of $6.86.

Investors long or short in the issue may want to focus on today’s range and close for further insight into its future price direction.