Woman looking out a window and Genius Group logo
Source: istock, Genius Group Facebook

Genius Group (GNS) Stock Pops After IPO, Valuations Might Not Be Sustainable

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Apr. 13 2022, Published 8:30 a.m. ET

While the U.S. IPO market has been dead so far in 2022, some smaller companies have gone public despite the pessimism toward IPOs. On April 12, EdTech startup company Genius Group started trading under the ticker symbol “GNS.”

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The company had offered 3.3 million shares in the IPO at $6 per share. The stock jumped five-fold on the first trading day. We saw something similar in cannabis company Akanda whose stock soared despite the scaled-down IPO. What’s the forecast for Genius Group stock and should you buy it now after the listing pop?

Genius Group scaled down the IPO.

When Genius Group initially filed for the IPO, it was looking to sell 7.3 million shares and kept the price range between $5 and $6. ThinkEquity was the original underwriter for the issue. However, in March, the company replaced ThinkEquity with Boustead and lowered the shares on offer.

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genius group stock
Source: Genius Group Facebook

We usually don’t see larger companies changing the underwriters. However, smaller companies, which fail to attract investor interest during the IPO process, often change underwriters.

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Genius Group is an EdTech company.

Genius Group is a global EdTech company with more than 2.7 million students in 200 countries. According to the company, “We are developing a future focused, entrepreneur education system that spans from early learning, primary and secondary school, through to university, adult education and corporate training.”

The company operates through various subsidiaries. GeniusU is the free-to-learn web and mobile education platform of Genius. It also operates the for-profit University of Antelope Valley, which has a 10-acre campus in Lancaster, Calif.

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genius group investors
Source: Genius Group Facebook

The company has a subsidiary Entrepreneur Resorts, which it acquired in June 2020. The business has resorts in South Africa and Bali and conducts retreats and workshops for entrepreneurs. The subsidiary also owns safari lodges in South Africa which makes it sounds more like a tourism company than an education company.

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Genius Group has numerous subsidiaries around the world.

Genius Group also has a subsidiary Property Investors Network in the U.K. The company is a property investor network and has 120,200 free and 26,368 paying members. Genius Group has a subsidiary Education Angles, which is a home childcare and education company in New Zealand. Another subsidiary E-Square Education is an education campus in South Africa.

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What are Genius Group's market cap and reported revenues?

Based on the outstanding share count and the closing price on April 12, Genius Group’s market cap is around $650 million. The company reported proforma revenues of $13.9 million in the six months ended June 30, 2021. The digital education business accounted for the bulk of the revenues while campus revenues accounted for only about $1.27 million. The in-person education revenues were only $478,000.

What’s the forecast for Genius Group stock?

Genius Group's valuations seem at odds with its earnings. The stock has risen amid speculative buying from traders. The low float makes it easy to pump small companies like GNS.

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We saw a similar buying frenzy in Akanda but it soon fizzled away. The stock trades above the IPO price. Yoshitsu investors weren't as lucky and the stock trades at almost half of its IPO price of $4 after briefly topping $40 per share.

Coming back to GNS stock, it's trading lower in premarkets on April 13. Whether the stock goes the way of Akanda or Yoshitsu remains to be seen but the valuations don't look sustainable.

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