There’s a common mantra among market analysts that eventually, fundamentals will matter. Whenever that magical time will be, it certainly doesn’t appear to be today. Case in point is Vinco Ventures (NASDAQ:BBIG). Billed as a selective acquisitions company focused on digital media and content, Vinco is in a relevant sector. The problem for BBIG stock is that it’s also a competitive one.
Sure, the company has made some waves across business headlines, most notably for closing the acquisition of Lomotif, the owner of the namesake short-form video platform “with hundreds of millions of installs around the world and tens of millions of monthly users,” per Vinco’s press release.
But competing against the likes of TikTok might not be the best move for BBIG stock. According to Influencer Marketing Hub, “internet and mobile users have at least 103 social media platforms to choose from. That’s quite a figure, making it so easy for a relatively smaller outfit like Lomotif to get lost in the crowd,” per an earlier take I had on BBIG.
However, as our own Chris MacDonald pointed out, the viability of the acquisitions is not all that’s been driving Vinco Ventures shares. According to his analysis of BBIG stock:
As with various impressive meme rallies of late, Vinco Ventures has been a top short-squeeze candidate. Retail investors have piled into this company because of its high short interest and borrow-fee rates. This company has made the top five short-squeeze stocks on our weekly list a number of times over the past month. Accordingly, the level of interest for investors looking for the next squeeze play appears to remain intact.
While intriguing, such tactics are ephemeral, which is why I’m skeptical about Vinco.
BBIG Stock Chart Looks Just Like Other Risky Ventures
If the trailing year-and-a-half period is known for anything on Wall Street, it could be the reputational damage that technical analysts have suffered. According to this theory, the market price is the ultimate arbiter of any discussion of tradable securities and assets. Yes, fundamentals are important — and that’s why they’re reflected in the price.
Because valuations reflect the collective negotiations that occur between supply and demand, it’s theoretically possible to discern where something like BBIG stock may end up. Now, I would argue that certain meme stocks — you know which ones I’m talking about — printed some of the oddest chart patterns, making them unreliable.
But for BBIG stock, the circumstance is much different. The manner in which it shot higher from late August till early September, only to fall sharply from its peak, then enter a gradual descent is akin to other speculative investments that were popular this year.
Off the top of my head, I can identify Sundial Growers (NASDAQ:SNDL), Zomedica (NYSEAMERICAN:ZOM) and Hyliion (NYSE:HYLN). None of these companies are fundamentally related, as far as I can tell. We’re talking about a botanical firm, a veterinary equipment company and an alternative fuels specialist.
But the single factor that connects them all is that at one point, they enjoyed significant support, enough to cause their share price to go ballistic. But as soon as these respective shares hit their peak, they tumbled, suddenly at first but then descending in a relatively controlled (but still painful) manner.
For speculators, I suppose the idea is that BBIG stock will eventually slow its descent to a crawl. At that point, the equity unit could be a buy again. Maybe. But then again, maybe not.
The Market Has Spoken
The other similarity among the three companies above and BBIG stock is that they’re all tied to relevant businesses. Botanical liberties has been a hot talking point for years. Millennials love their pets. And the future of transportation is clean if not electric.
For BBIG stock, social media could one day completely eclipse traditional media, especially after the paradigm shift that the pandemic imposed. But relevance alone isn’t a guarantee of success.
In my opinion, if we take the theory of technical analysis as reasonably legitimate — and for Vinco Ventures shares, I think we can — then we can also assume that the market has spoken. If BBIG had potential, it wouldn’t be printing the same ugly pattern that the currently disappointing meme stocks — or meme-ish stocks — are printing.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.