Why Shares of Genius Brands International Plunged 19% on Wednesday

Shares of children's media company Genius Brands International (NASDAQ: GNUS) fell as much as 19% in trading on Wednesday after the company announced a large offering of stock. Shares recovered slightly later in the day but were still down 15.1% at 12:50 p.m. EDT.

Genius Brands is offering 37.4 million shares of stock to "certain long-standing investors" at a share price of $1.55. That may sound like a decent deal given the fact that shares closed yesterday at $1.42 per share. But there's a kicker. Investors will also get a five-year warrant to purchase stock at $1.55 per share, effectively doubling the dilution of the offering today.

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Source Fool.com