Vinco Ventures: Weak Fundamentals and Unfocused Business Strategy

Stocks to sell
  • Vinco Ventures (BBIG) stock has rallied nearly 27% in the past month on very little news
  • The company has a very vague business model and fundamentals that are weak, so this rally looks speculative with high odds of a reversal
  • Investors should not get carried away by this penny stock, but wait for the latest financial reports to get a clearer view of the business model performance
Source: vincoventures.com

Vinco Ventures (NASDAQ:BBIG) is a holding company that owns a social media platform called Lomotif. It also owns Cryptyde, a blockchain technology company, and AdRizer, a platform for advertisers to optimize return on investment and digital analytics.

At the time of writing, BBIG stock has risen on very little news, delivering gains of approximately 28% and 39% for the past month and year-to-date, respectively. In a period during which the broader U.S. stock market crashed amid geopolitical tensions, why has BBIG stock rallied on very little news that is not related to financial reports? The explanation is twofold: either a massive short squeeze has occurred, or meme trading has returned to the stock market. Here is why you should be concerned about BBIG stock now.

BBIG Vinco Ventures $2.90

Vague Business Model With Poor Fundamentals

Vinco Ventures considers itself a company with a “B.I.G. Strategy: Buy. Innovate. Grow.”

The purpose is to acquire brands. It innovates with the use of its “internal traffic platforms of Honey Badger and Social Pulse Media” to grow its brands. If you are still wondering what the real business model is, do not worry. In the past, I wrote another article on BBIG stock and reasons to avoid it.

The latest news about Vinco Ventures is that it still has a pending merger with media and entertainment company ZASH Global. Additionally, it has announced that Cryptyde, a wholly-owned subsidiary of Vinco Ventures, has agreed to raise $42 million as debt and common equity to pursue its business model. It has also acquired AdRizer, a company providing technology solutions using artificial intelligence for digital advertising analytics and programmatic media buying.

It was stated that AdRizer will be beneficial for advertising revenue on Lomotif. Investors should be very concerned with this news as it does not justify such a strong short-term rally, as the financials of the firm are not strong. I see no clear focus on what the main driver of revenue is in this business yet.

Wait for Latest Earnings Report to See Any Improvement

The latest 10-Q form from Nov. 2021 showed revenues of $7.4 million for the nine months ended on Sep. 30, 2021. Additionally, it shows a huge operating loss of $40.88 million and a net loss from continuing operations of $783.48 million. It gets even worse for Vinco Ventures stock as its total weighted number of shares outstanding grew to 42,326,468, almost four times higher than in the nine months ended on Sep. 30, 2020.

Another negative factor for BBIG stock is that for the period between 2018 and 2020, the firm was not only unprofitable, but was burning cash, too. This is the definition of a business model that is leaking from all sides and needs to be fixed.

Vinco Ventures is not performing well and its quarterly sales for the first nine months of 2021 of $7.4 million are not meaningful compared to its current market capitalization of nearly $613.50 million.

Investors Should Avoid BBIG Stock and Wait for More Financial Data

The financials do not provide any solid reason to invest in BBIG stock now.

If the rally happened because of the Cryptyde spinoff news and the latest acquisition, then this should be reflected on the income statement soon over the next quarters.

I see a company that has a business model that is doubtful. Investors should not get fooled by the cheap stock price and avoid BBIG stock based on its fundamentals. Soon, Vinco Ventures should file a 10-Q report that will provide more information on how it has performed. Until then, it has been so long since a report that investors are in the dark. Choosing BBIG stock now would not be a good investment strategy.

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Read More: Penny Stocks — How to Profit Without Getting Scammed 

On the date of publication, Stavros Georgiadis, CFA  did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.

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