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With a market cap under $5 million and a stock price under $1.00, Grom Social Enterprises, Inc. (NASDAQ: GROM) is a kid-friendly stock that deserves a place on any savvy investor's watchlist. Successful IPs, strong acquisitions, many diverse revenue streams, and a management team filled with notable Hollywood names all read like a recipe for what could infuse significant upside ahead.
Below are four catalysts that could fuel a boost in share price for this full-service kids entertainment company.
1. There may be a lot of discourse in Washington, but one thing the far right and the far left will agree on is to keep kids safe. Lawmakers are pushing to amend legislation reauthorizing the Federal Aviation Administration to include two major children's online safety and privacy bills, known as the Kids Online Safety Act (KOSA) and the Children and Teens' Online Privacy Protection Act, known as COPPA 2.0.
This bodes well for GROM, whose founder Zach Marks saw a problem many years ago and created a solution. It was in 2013, when Marks was only 12 years old, that he had a vision: an online place for children that is much like Facebook and Instagram but is safe, kid-friendly, and anti-bullying. Grom Social, which began as a website in 2012, quickly grew to millions of users and was upconverted to a mobile app in 2018. The app has been recognized by the John Walsh Foundation, the PTA, and even the White House which invited the company in 2020 to share their mission to the administration.
One of Grom Social's users and original ambassadors includes Marks' sister, Caroline Marks, who is the 2023 WSL (World Surfing League) Women’s World Champion. With a big fan following, Caroline is soon on her way to the 2024 Paris Olympic Games and will be sharing her experience on the highly anticipated redesigned Grom Social app that is debuting this summer.
The redesigned Grom Social app will feature a new, updated version of Grom Educational’s proprietary Digital Citizenship License (DCL) course, offered to schools nationwide, as part of the app’s new offerings. GROM's corporate sibling Grom Educational Services, offers the Digital Citizenship Licensing (DCL) course for K-12 school customers nationwide who utilize the company’s NetSpective web filter solution. With tens of thousands of schools across the nation, the value of this web filter solution is unmatched.
2. While GROM has its roots in its social media site, the company has strategically found other profitable venues. The company owns Philippines-based Top Draw Animation and a majority of Curiosity Ink Media. If Disney has shown the world anything, it is that animation, children's books, and toys have a very big market.
Top Draw provides award-winning premium animation production services for global and international entertainment companies. How big are these entertainment companies?
Think Disney… Nickelodeon… Dream Works… and the Cartoon Network, just to name a few.
Named as one of Business Worldwide Magazine’s “20 Most Innovative Companies to Watch” in 2022, Curiosity Ink Media is a global media company that develops, acquires, builds, grows and maximizes the short, mid, and long-term commercial potential of Kids & Family entertainment properties and associated business opportunities. Driven by a best-in-class leadership team, Curiosity Ink Media’s multi-faceted IP library is designed to amass ongoing value through strategic stewardship, partnerships, and highly targeted market entry.
Curiosity Ink owns two IPs that are currently in production. To get even one in production and distribution is a big deal and Curiosity Ink has two. This leads to GROM's Toon2Tango connection. Curiosity Ink Media has joined forces with Toon2Tango GmbH & Co. KG, a kids and family entertainment venture headed by long-time television and movie industry experts Ulli Stoef and Jo Daris. Hollywood-based Curiosity Ink Media and Germany-based Toon2Tango are readying a film called Santa.com for a 2025 fall release. The Santa.com film takes place in a world where Santa's Workshop has undergone a technological revolution. Magic and tradition have been replaced with automation and efficiency.
Toon2Tango and Curiosity have also entered into a co-production relationship, with an equity stake in Hey Fuzzy Yellow!, a preschool series that will serve as a launchpad for what Curiosity and Toon2Tango envision will be an entertainment franchise property. The series has already secured financial backing and distribution agreements with several international programming services. Hey Fuzzy Yellow! is set to launch in Spring, 2025.
3. A strong management team is leading GROM into profitability and the company is armed with Nickelodeon veterans. The company’s Executive Vice President, Paul Ward, helped guide Nickelodeon’s family programming as its Executive Vice President, Primetime. Ward was one of the original architects of TV Land, which remains the highest-rated cable network in the Paramount (formally Viacom/CBS) family.
Earlier this year, former Technicolor executive Cyrus Mistry was named COO of Top Draw Animation. Mistry was the former VP of Technicolor’s Animation Games & Production (India).
4. The final puzzle piece that could bring it home for GROM this year is an exciting LOI that positions the company for stellar growth in the gaming industry. The company has entered into a non-binding letter of intent to acquire Texas-based Arctic7, to tap into the $180 billion gaming market — $20B of which is gaming for kids — and explore synergy opportunities across Grom’s subsidiaries. Arctic7, which was created by gaming industry veterans from Microsoft, EA Sports, and Activision, provides a robust suite of full game and co-development services alongside its own intellectual property development within gaming, and virtual production services for the movie and TV industry.
Narwhal Studios, a wholly owned subsidiary of Arctic7, recently revealed its role in the highly anticipated David Ayer TV project ‘Lollipop’ and Francis Ford Coppola movie ‘Megalopolis.’ Narwhal Studios, acquired by Arctic7 in 2023 and famed for its virtual production and VFX work on multiple Lucasfilm properties such as The Mandalorian, Ahsoka and Obi-Wan Kenobi, as well as Marvel’s Ant-Man and the Wasp: Quantumania and Netflix’s Avatar: The Last Airbender, has been heavily involved in Lollipop since early its design phases.
Acrtic7 is making multi-millions in revenues and has a vision to become a leader in transmedia entertainment. Grom aims to complement its existing entertainment offerings of safe social media for kids and its growing catalog of original intellectual property with a move into gaming and its attendant revenue growth opportunities. Keep an eye out for developments on this budding acquisition.
Summary
There is no denying that Wall Street is filled with numerous promising companies. But one that merits considerable attention right now is Grom Social Enterprises (NASDAQ: GROM), which has seen some unforgivable carnage in recent months.
Fortunately, this presents a rare opportunity for investors to witness what may be one of the biggest underdog comebacks of 2024. While big names like Disney and Hasbro dominate the kid-friendly space, GROM looks to be at a value right now and is at the early stages of its narrative. This small-cap NASDAQ-traded company may emerge as the next leading destination for kids entertainment while building maximum shareholder value.
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