Savvy companies know there are a few things that create an immediate buzz among investors, such as electric vehicles, NFTs, SPACs and cryptocurrency. Enter Vinco Ventures (NASDAQ:BBIG), a business comprising several interesting elements.
Vinco Ventures includes a TikTok-like application, non-fungible tokens (NFTs), video and music content. Due to this exciting business mode, BBIG stock caught fire. Shares are up 170% in the last month alone.
Vinco Ventures has a joint venture partnership with Ted Farnsworth-backed Zash Global Media, named ZVV Media Partners. Many investors might be familiar with Farnsworth and some of his earlier ventures; he is behind the unsuccessful MoviePass subscription service and Psychic Discovery Network, based on the more famous Psychic Friends Network.
ZVV Media Partners recently purchased Lomotif, a short-form video platform with over 31 million on-platform monthly active users (MAUs) as of June 2021. The intention is to build out its brand to compete with the likes of more illustrious names like TikTok.
Vinco has also purchased Emmersive Entertainment, which focuses on NFTs. The subsidiary recently came out with an NFT album from Canadian rapper Tory Lanez. There was a hard limit of 1 million albums sold with accompanying artwork at $1 each. The album has sold out. Users who picked it up initially can now resell it to make a profit. Vinco will be limited in what it can get because of its original royalty agreement with the artist. But these moves attract the casual investor.
That brings us to a very good point. Most of the investors interested in BBIG stock are those looking for short-term profits. The buzzwords will attract them, making the stock sensitive to any positive PR or news.
NFTs Are Taking Over and BBIG Stock Is Reaping the Benefits
In the last few years, we have seen a massive change in the way people invest their hard-earned capital. After the stock market crash of 2007-2008, many investors became skeptical. However, after the longest bull market in history, investor confidence returned, and you can see it with the speculative bubble we see in several assets.
Against this backdrop, it seems not a day goes by without hearing about another new collectible NFT selling for millions of dollars. Cryptocurrencies and blockchain were already concepts the investing world was struggling with, along with these digital assets.
Michael Burry, the former head honcho at Scion Capital who managed to profit by shorting the real estate market in anticipation of the 2008 financial crisis, is a notable critic of the NFT space. He changed the header of his Twitter profile to a screenshot of the following quote: “NFTs exist so that the crypto grifters can have a new kind of magic bean to sell for actual money, and pretend they’re not selling magic beans.”
NFTs are extremely speculative. That is true for companies connected to the space, such as Vinco Ventures. Using assets acquired in the Emmersive Entertainment takeover, it created a platform E-NFT.com. It is a streaming service dedicated to the NFT game that aims to protect artists from exploitation. It’s an important selling point. The NFT space is full of grifters and spammers who are hawking the work of others without their permission and notice.
However, NFTs are still a highly volatile asset class. Yes, you could say the same thing for cryptocurrency, but at least there, you have several use cases and can trade them.
Scaling New Heights
Considering the hysteria surrounding NFTs, you will make short-term gains with BBIG stock. Plus, as my colleague Mark Hake pointed out in his article, the brand value of Lomotif is not fully reflected in the share price. Under these circumstances, purchasing a small number of shares will not hurt. Since this is the only NFT pure play out there.
Crypto mining stocks and Bitcoin (CCC:BTC-USD) ETFs have done very well in recent months, mainly because people want to hedge their risk when investing in this space. Keeping that in mind, it should not surprise anyone that this stock can triple in a matter of weeks.
However, dedicating a huge portion of your portfolio to this one is not a great investment strategy. It could prove very costly.
On the publication date, Faizan 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.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio. Faizan does not directly own the securities mentioned above.