As I predicted a few weeks back, the choppy uptrend in tech-focused acquisitions company Vinco Ventures (NASDAQ:BBIG) appears to have come to an end. Following an 800%-plus year-to-date gain, BBIG stock topped out in early September. Shares now sit more than 60% below that high, following a 44% drop in the past week and a half.
A recent management change and the announcement of a merger with ZASH Global Media and Entertainment have contributed to recent volatility in the shares. However, the bigger concern is the company’s bleak fundamentals.
Vinco owns multiple subsidiaries that compete in some of the most exciting online business areas, including video streaming and cryptocurrency. However, the company has yet to generate meaningful results, and most of the stock’s run-up appears to be the result of retail trader interest.
With a short percentage of float of 25%, BBIG stock may be ripe for a short squeeze. Yet, it remains nothing more than a speculative play at this point, offering little value to long-term investors.
Vinco’s Deplorable Financials
Vinco has been in the news for its investments in a short-video content platform called Lomotif and its non-fungible token endeavors. However, as my InvestorPlace colleague Dana Blankenhorn recently explained, the company lacks the financials to excite investors: “What we’re left with is a lot of Internet buzzwords that will make you swoon. NFTs, crypto, TikTok, digital influencers … the list goes on and on. What you won’t find is a lot of revenue.”
For the first half of the year, Vinco generated $5.26 million in revenue, a 26% drop from the first half of 2020. During that same period, the company’s net loss ballooned to $8.95 per share from 4 cents per share.
Moreover, despite a healthy increase in total assets, liabilities have risen significantly. Vinco ended the second quarter with total assets of $121.3 million, an increase of more than 300% over the end of 2020. However, liabilities rose more than 900% during that period to $148.8 million.
Changes at the Top
Vinco has undergone some major management changes. Senior marketing specialist Lisa King will be taking over the top management position in the company. She is replacing Christopher Ferguson, who will serve as senior strategic advisor with parent company ZASH.
Vinco’s CFO, Brett Vroman, has also shifted roles, being appointed CFO of Vinco subsidiary Cryptyde. The company further announced it has moved the date for the planned spinoff of Cryptyde to create more value for Vinco shareholders.
According to the company, the management transition has gone swimmingly. “We’re happy to have mapped out over the last several months seamless transitions that align executive talent with roles designed to drive each individual business forward and expand revenue streams through all the ZASH companies,” outgoing CEO Ferguson said.
With such a big change at the top, you’d expect a profound change in Vinco’s strategic approach. So, investors will want to keep a close eye on how the new team sets its priorities in the coming months.
The Bottom Line on BBIG Stock
Vinco Ventures has had quite an eventful year. It is looking to build a cutting-edge technology business that focuses on some of the most-talked-about online industries. However, at this point, there is little visibility on how much these businesses will benefit its top line in the long term.
With the fundamental case for BBIG stock lacking, it’s a highly unattractive bet.
On the date of publication, Muslim Farooque 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.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.