Because of its small market capitalization, you might not have heard of Vinco Ventures (NASDAQ:BBIG). Yet, in the near future, the price action of BBIG stock could garner a lot of attention.
Vinco Ventures is a relatively tiny company that acquires brands which are mostly related to social media and internet traffic generation. Lately, the company has gotten involved in the non-fungible token (NFT) market, as well.
Earlier this year, BBIG stock popped 250% when Vinco Ventures announced its plans to merge with ZASH Global Media. The latter company is led by Ted Farnsworth, the owner of an 80% stake in a TikTok rival.
So Vinco Ventures is interesting in its own right as a mergers and acquisitions company focused on digital commerce, consumer brands and NFT’s. However, it’s also a potential short-squeeze target – and that’s an angle worth exploring.
A Closer Look at BBIG Stock
Prior to the January 2021 announcement of Vinco’s merger with ZASH Global Media, BBIG stock only cost $1 and change per share.
Then the price exploded to almost $5. However, the buying frenzy faded soon and by mid-April, the stock was down to the $2 area.
Another blast-off occurred in early June as BBIG stock rocketed up to $5 again. Yesterday the shares closed at $4.77.
So Vinco is a penny stock with a high degree of volatility. Therefore, I wouldn’t recommend pouring your entire trading account into Vinco Ventures.
I’ve mentioned $5 a couple of times, and it does appear to be a resistance level for BBIG stock. As you’ll see below, I’m not the only commentator who’s eyeing this particular price level.
Is an Epic Short Squeeze Coming?
Let me introduce you, if you’re not already familiar with him, to Will Meade. He describes himself as a “Former hedge fund manager educated at the University of Chicago and Johns Hopkins.”
Meade has 196,000 followers on Twitter (NYSE:TWTR). His tweets are sometimes controversial, but never dull.
Not long ago, Meade issued a tweet that garnered 1,333 likes:
“If $BBIG can get near $5 it will set off an epic short squeeze because the open interest is so bullish 316,000 calls to just 7443 puts. That means market makers are short a whole lot of $BBIG stock which they will have to cover when $BBIG gets close to $5″
In a separate tweet, Meade stated that the stock “is officially ‘hard to borrow'” and “this is now set up for an epic short squeeze.”
Meade may be right about this. As InvestorPlace contributor Luke Lango, points out, Vinco Ventures checks all the boxes for a perfect short-squeeze target:
- Low stock price
- Small float
- High short interest (that’s Meade’s point, I think)
- Lots of momentum (which attracts mainstream interest)
The NFT Angle
Along with being a potential short-squeeze target, Vinco Ventures is intriguing because the company is getting involved with the red-hot NFT market.
For instance, a Vinco Ventures subsidiary pre-sold the first of three “exclusive Emmersive NFT’s” (E-NFT’s) to a private investor.
If you can believe it, the deal structure includes an initial payment of $2 million for the three-E-NFT set.
Furthermore, a subsidiary of Vinco Ventures reportedly plans to release “an exclusive NFT from superstar rapper, singer, songwriter and record producer Tory Lanez.”
I didn’t see the exact selling price of that NFT in the press release. Still, I expect that it won’t be cheap.
Vinco Ventures’ foray into the NFT market should make the company more interesting to speculative traders. Again, let me emphasize that BBIG stock is a risky bet, but it could pay off big-time.
The Bottom Line
Only time will tell whether Meade prediction of an epic short squeeze of BBIG stock is correct.
But even if that doesn’t play out as predicted, the NFT angle makes Vinco Ventures intriguing enough for risk-tolerant traders to consider.
On the date of publication, David Moadel 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.