Updated Coverage 01/12/23
Good evening everyone,
GROM breaking out in after hours up over 28% at $1.65/share and as high as $1.74/share.
Short Squeeze / Short Covering
Depending on where you go to view the data, GROM is showing the amount of the current float sold short of around 61%, which is ridiculous. Note that GROM is #2 on the list of most shorted stocks on the NASDAQ.
The price action this week makes perfect sense when you look at the amount of current short interest.
We may have more on this tomorrow.
The Traders News Team
Hello everyone and a warm welcome to our new members,
Grom Social Enterprises (NASDAQ: GROM) has an amazing growth story that is worthy of our coverage. The shares in the public float (654K) is very similar to our recent 270% winner last week.
Grom’s Blue-Chip Clients Include:
Disney, Hasbro, Dreamworks, Warner Brothers, Nickelodeon, Scholastic
Source and link: Grom Investor Deck
Grom Social Enterprises, Inc. is a growing social media platform and original content provider of entertainment for children under 13 years of age, which provides safe and secure digital environments for kids that can be monitored by their parents or guardians. The Company has several operating subsidiaries, including Curiosity Ink (discussed below) Grom Social, which delivers its content through mobile and desktop environments (web portal and apps) that entertain children, let them interact with friends, access relevant news, and play proprietary games while teaching them about being good digital citizens. The Company owns and operates Top Draw Animation, which produces award-winning animation content for some of the largest international media companies in the world. Grom also includes Grom Educational Services, which has provided web filtering services for K-12 schools, government, and private businesses.
We very highly recommend you listen to the recent interview below with CEO Darren Marks. There is some great info and explanation of the growth potential in there.
In the past GROM has stated that bigger revenues are ahead of them. Last week, CEO Darren Marks participated in an audio interview where he outlined specifically when and where those revenues are coming.
Here are some highlights from that interview:
Top Draw Animation, currently the company’s largest revenue generator, is coming back to pre-covid levels. The company, located in the Philippines was subject to severe covid restrictions. Top Draw is an animation sub-contractor meaning there is another company between the content creator and them. GROM is ready to close an equity partnership that will allow Top Draw to do pre and post-production work, eliminating the middleman and making them an animation contractor.
Grom Social, the company’s website for kids, has some new tailwinds happening. The US Congress is beginning to put some teeth in the Children’s Online Privacy Protection Act (COPPA) recently handing out fines in the hundreds of millions to Google, Meta, and others for violations. GROM is virtually the only online destination that is fully COPPA compliant.
Some children’s brands are looking at GROM, along with Cepia, their licensing and distribution partner, to explore marketing their brands on Grom Social. Mr. Marks also teased about a new Grom Social app coming as early as May with a feature not seen before on social media.
Santa.com, which launched in October, has been a success for the company with revenues expected to be reflected in Q4 this year. The website had 38,000 visitors over the Thanksgiving weekend. Santa.com also features visits with an AI enabled Santa with 7,000 programmed responses.
Curiosity Ink Media is starting to see an influx of partners and development funding for some of their multi-media IP products. They are also partnering with a European company on a new TV series with distribution already lined up in many countries. Mr. Marks also teased about an announcement coming next month about a collaboration with a famous director that has worked on movies generating over $350M in revenues saying investors will immediately know who he is.
In closing the interview Mr. Marks exalted his management teams decades of executive experience and successes in the children’s entertainment industry saying, “they can get an audience with anybody in the industry.” The last comment was something to the effect of – “If I could get Wall Street to see us the way our industry does, we’d be a $5-10 stock.”
Massive growth and transformation are currently happening within the animation industry due to streaming services. These services need content, and we believe with industry veterans whose past endeavors include the development of hits like Dora the Explorer, Scooby Doo Re-boot, Sponge Bob Square Pants, Shrek, and Kung fu Panda. We believe it’s only a matter of time before we see one of GROM’s brands streaming on a service like Netflix, HULU, Disney or Amazon. As well as the addition of new contracts for animation services.
One Grom subsidiary, Curiosty Ink Media is creating an IP portfolio of multi-platform content they can exploit through licensing, let’s review them:
Laugh on Lorb
Heston of the Apes
The Legion of Forgettable Supervillains
The Pirate Princess
Baldwin’s Big Adventure
These franchise, multi-platform creations are part of the CIM portfolio of IP being developed by industry veterans who’s relationships are well grounded in the film and television industries. The team at CIM have backgrounds at Nickelodeon, Warner Bros., Cartoon Network, and Universal, amongst others.
Remember, these are multi-platform franchises that could include books, animated series, animated feature films, or a combination thereof and GROM has their own animation studios.
Will every one of these potential franchise developments become a hit? Not likely, but how many Sponge Bob Square Pants type platforms does a company need to be successful?
As mentioned above, Curiosty Ink Media is only one of four business segments of Grom. So, let’s look at the other three.
Grom Social – A safe for children under the age of 13 social network. COPPA compliant round-the-clock monitoring with parental controls. Includes 1450 hours of exclusive live streaming content. The company delivers content through mobile and desktop environments (ios and android) that entertain children, allow kids to interact with their peers safely, all while promoting good digital citizenship.
Note that Grom Social is one of the only COPPA (Children’s Online Privacy Protection Act) compliant platforms available at the moment. As lawmakers embrace this responsibility Grom Social could see massive growth. To quote Mr. Marks from the recent interview a “hockey stick type of growth.”
Grom Educational Services – Web filtering for schools, federal/municipal government and private businesses.
Top Draw Animation – An award-winning producer of top-quality animation and a leading source of 2D animated programming for global entertainment providers.
(Source Yahoo Finance)
Book Value Per Share $28.68
Current price $1.56 as of Friday’s close (01-06-23)
Shares Outstanding 2.18M
Shares in the Public Float 654K
Market Cap 3.39M
Held by Insiders 10.4%
Held by Institutions 19.64%
Short Interest Percent of Float (a/o 12-15-22) 14.27%
GROM Stock Chart
As indicated by the chart below GROM is flashing oversold with a residual strength index (RSI 14) of 33.75
As always we will have an updated report on Grom this week as well as any developments that may occur during our coverage.
The Traders News Team
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