It goes without saying that Vinco Ventures (NASDAQ:BBIG) is far from a perfect situation. There are a lot of red flags with BBIG stock.
The company has a tendency to release details about its operations in a roundabout way.
There’s also its association with Ted Farnsworth, former chairman of the now-defunct movie theater subscription service MoviePass.
With this, it’s hard not to think the situation here will end badly. Just like it did with MoviePass’s publicly-traded parent company, Helios and Matheson (OTCMKTS:HMNY).
However, as Reddit traders, who bid it up nearly two months ago, have started to make their exit as it falls back to lower prices, a second look at it may be warranted.
The company’s Lomotif investment shows some potential. Lomotif is a video-sharing site that aspires to be the next TikTok.
This potential alone may not be worth the $5-ish per share the stock trades for today, much less the $12.49 per share meme stock traders were willing to pay for it in early September.
If it drifts lower and the company releases more detailed financials, BBIG may become a worthwhile opportunity.
The Latest on BBIG Stock
Last month, the focus with Vinco Ventures was on the planned spinoff of its NFT (non-fungible token) business, Cryptyde. This month the Cryptyde divestiture is still in the works, but as InvestorPlace’s Samuel O’Brient reported Oct. 20, the company will wait until Dec. 27 to complete the spinoff to qualify the transaction as a tax-free exchange.
Along with delaying its much-awaited spin-off, the company made another big announcement: it wil be changing its name from Vinco to ZASH.
This comes after the company announced it was appointing Lisa King, CEO of ZASH Global, as its own CEO. Now does this mean that ZASH Global, Vinco’s partner in both the purchase of its Lomotif stake, as well as its recent purchase of AdRizer, and this company, are finally merging?
It’s hard to tell. The most recent press release makes it seem like the two entities are now one, but doesn’t officially state whether that’s the case.
In short, just like before, a lot remains a mystery with Vinco. With this, it’s tough to assess whether it’s a buy or not.
The fact BBIG that stock is still partially inflated from its brief time as a meme stock darling makes it unappealing as well. Nevertheless, it may not take much to clear these two factors out of the way.
If These Two Things Happen, Vinco Could Be a Buy
What needs to happen before Vinco Ventures, soon to be ZASH, goes from a “tread carefully” situation to one where it’s a clear-cut buy is obvious: the Reddit rally needs to fully recede.
That’s playing out right now, as seen from the stock’s current downwards trajectory.
Yet a move back to $2-3 per share (or lower) for BBIG stock alone won’t make this a buying opportunity. A second event needs to happen: the lack of clarity highlighted above as a concern needs to be remedied.
As our Louis Navellier recently wrote, this will continue to be a complicated company to analyze, until it consummates its previously-announced merger deal.
But even if the principals behind both entities decide not to consolidate them into one, there’s at least something else that could go a long way to make this an easier situation to assess. That would be releasing more financial information about the 50/50 joint venture it co-owns with ZASH Global. This vehicle (ZVV Media Partners), holds an 80% stake in Lomotif, and will soon own 100% of AdRizer.
Either way it comes out, more information could turn this into a clear-cut buying opportunity.
The numbers could show the stock is cheap relative to its underlying holdings. If not that, it may still show that it’s more than reasonably-priced, compared to the long-term growth potential of Lomotif and AdRizer.
The Verdict: Sit Tight for Now
Barring a rebound, which possibly could happen ahead of the Cryptyde spinoff, expect Vinco to continue experiencing its hangover from its late August/early September meme stock rally. As this plays out, it’s best to avoid buying it.
Yet, if in the coming months, it keeps falling, and the situation here becomes much easier to analyze? It may be worth buying.
Now, even if there’s more clarity/transparency on Vinco’s part, don’t take that to mean it’s no longer a high-risk situation. Lomotif has its work cut out for it if it intends to give TikTok a run for its money.
Continue to view BBIG stock with a critical eye. But keep it on your radar, as more information and a lower stock price could make it a worthwhile buy.
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On the date of publication, Thomas Niel 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.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.