GNS: An Online Education Company Worth Looking At

By Brad Sorensen, CFA

NYSE:GNS

READ THE FULL GNS RESEARCH REPORT

Genius Group (NYSE:GNS) is on a mission to change the way people experience online education by making it more about the student. Through technology, vision, and a unique approach, Genius is bringing AI-involved learning to the masses.

There are many online education companies in the world, especially after the last couple of years. So why should investors consider Genius along with, or above, all the other competitors? This is not to denigrate any online education provider, but rather, point out that Genius Group may be doing things in a different way that might be able to connect in a more effective way with students, both adult and children, who have had a lack of success with some of the existing providers out there. It’s no secret that people learn in different ways, and from our point of view, Genius appears to be offering a different way of learning-one that engages students by learning what they love and teaching them in that way.

The best way to understand why we think GNS is worth a look is to first understand the educational point of view, and how it is delivered, that Genius offers. Let’s start with a look at what Genius views as the differences between a Genius School and a Traditional School:

• Student-based and Personalized vs. Classroom-based and Standardized

• 21st Century Leadership Skills vs. Teaching to the Test

• Collaborative vs. Competitive

• Challenge-based vs. Course-based

• Accelerated learning vs. Rote learning

• Global and flexible vs. Local

• Tech-based vs. Textbook-based

• Multiple Mentors per challenge vs. One teacher per class.

Genius Group recently presented an investor update, during which they confirmed our optimism over the company’s growth prospects by raising the company’s estimates for 2022 revenue, which resulted in us raising our valuation slightly from $18.40 to $19.20, which represents a valuation substantially above its recent trading price. We believe this valuation is justified due to the discount we believe is being applied to GNS due in part to the “risk off” mindset of investors in general as of late along with what we perceive to be a negative sentiment toward online education following the Covid-19-induced virtual learning. In fact, it is the difference between what Genius offers and what most people have experienced when learning online that largely leads to our optimistic view. As detailed below, Genius has reinvented the online learning experience and has the staff and resources needed to make it work.

Additionally, we believe there are some macroenvironmental factors that will further benefit Genius and help to accelerate its growth. As most investors have likely heard about, or experienced, there is a teacher shortage in the United States, with the Economic Policy Institute projecting the demand for new teachers will be approximately 300,000 over the next two years, while the supply of new teachers is projected to be just over 100,000 over the same time period. Combined with growing parental concern about what is being taught in schools, teachers striking, transportation issues and concerns about the safety of students, we believe the result will be an increasing demand for quality, engaging online learning, which we believe Genius will provide. As mentioned, we’re already seeing demand for Genius service increase, which is detailed along with other updates below:

• Genius raised 2022 revenue guidance from approximately $35 million to a range of $43-45 million.

• Genius obtained $17 million in additional funding in August, with the sale of a convertible note to an institutional investor.

◦ The note is convertible to GNS stock at an initial conversion price of $5.17.

We are looking forward to further updates from the company and quarterly earnings releases that we believe will further confirm our positive view on GNS stock and believe that GNS is worth a look by investors with a modestly higher risk tolerance.

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