Grom Social Enterprises, Inc. (NASDAQ: GROM), a kid-focused entertainment company, is catching the eye of savvy investors. With a market cap under $5 million and a stock price below $1.00, GROM's diverse revenue streams, successful intellectual properties (IPs), and strategic acquisitions suggest significant upside potential.
One major catalyst for GROM is the legislative push for children's online safety. Lawmakers are aiming to amend legislation reauthorizing the Federal Aviation Administration to include the Kids Online Safety Act (KOSA) and the Children and Teens' Online Privacy Protection Act (COPPA 2.0). This legislative focus aligns with GROM's mission, initiated by founder Zach Marks in 2013, to create a safe, kid-friendly online space. The Grom Social app, recognized by prestigious bodies like the John Walsh Foundation and even the White House, is set to debut a redesigned version this summer, featuring an updated Digital Citizenship License (DCL) course aimed at schools nationwide.
GROM has also diversified beyond its social media roots. It owns Top Draw Animation, a Philippines-based company providing premium animation production services to global giants like Disney, Nickelodeon, and Cartoon Network. Additionally, GROM holds a majority stake in Curiosity Ink Media, a global media company developing and maximizing kids and family entertainment properties. Curiosity Ink is currently working on two IPs and has partnered with Toon2Tango GmbH & Co. KG for upcoming projects like the film Santa.com, set for a 2025 release, and the preschool series Hey Fuzzy Yellow!, launching in Spring 2025.
A strong management team further bolsters GROM's prospects. The company’s Executive Vice President, Paul Ward, is a former Nickelodeon executive, while Cyrus Mistry, the new COO of Top Draw Animation, brings experience from Technicolor. These seasoned professionals are steering GROM towards profitability.
GROM is also making strategic moves into the gaming industry. The company has entered a non-binding letter of intent to acquire Texas-based Arctic7, aiming to tap into the $180 billion gaming market. Arctic7, founded by veterans from Microsoft, EA Sports, and Activision, offers comprehensive game development services and has been involved in high-profile projects like David Ayer's TV project Lollipop and Francis Ford Coppola's film Megalopolis. This acquisition could significantly enhance GROM's entertainment offerings and revenue streams.
Overall, Grom Social Enterprises, Inc. presents a compelling investment opportunity. With its focus on safe, kid-friendly content, a diversified portfolio, and strategic market moves, GROM is well-positioned for growth. Investors should keep an eye on this underdog as it navigates the evolving landscape of children's entertainment and online safety.
