As the Genius Group surges, is it a good penny stock to buy?

Genius Group (GNS) has become one of the best-performing penny stocks in the past few days. It surged by 40% on Monday and reached a high of $0.59, its highest point since January 3rd. It has soared by more than 150% from its lowest level this year, giving it a market cap of over $57 million.

Genius Group stock price has bounced back sharply after the company made several transactions. It merged with FatBrain AI a while ago as it seeks to become a major player in the artificial intelligence industry.

The main catalyst for the company this week was its merger with OpenExO as it deepens its investments in the AI industry. OpenExO is a company with over 36,000 educators, companies, and other organisations.

Genius Group aims to grow its annual revenue to over $1 billion by adding over 100 million customers from around the world.

The company will likely need to do more to get to its annual revenue target of $1 billion. The most recent results showed that its annual revenue rose by 20% to between $27 million and $29 million. It made $18.2 million in 2022. This means that it needs to do a lot of work to stimulate this growth. 

Genius Group expects that its total loss for the year will be between $3 million to $5 million. It also needs to see a lot of student growth considering that it has between 5.7 million and 6 million students.

From a macro level, Genius Group is in an industry that is growing quickly. Studies show that the company’s industry will grow by 4.3% in the next few years to over $10 trillion by 2030. Over 800 million students are expected to come online. 

The challenge is that Genius Group’s balance sheet is quite thin. Its current assets dropped from $24.25 million to $9.3 million while its cash balance stood at $2.6 million.

GNS chart by TradingView

The daily chart shows that the GNS share price bottomed at $0.2354 in January, forming a double-bottom pattern. 

As it jumped, the stock soared above the 50-day and 25-day Exponential Moving Averages (EMA). It has also retested the descending trendline, which connects the highest swing since October 10th.

Therefore, I suspect that the stock will resume the downtrend soon as it enters a profit-taking zone. If this happens, the price to watch will be at $0.40.

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