Vinco Ventures (NASDAQ:BBIG) stock has been trading significantly lower after reporting its deplorable third-quarter results.
Vinco Ventures shed almost 20% of its value after reporting earnings on Nov. 23.
Yet again, the torrid third quarter results illustrate that there’s not much substance in the company. It’s mainly just a bunch of buzzwords that have pushed it into the limelight.
Vinco Ventures is essentially a tech-focused acquisitions specialist that has undergone a major rebranding of late. If that phrase has you shaking your head, you’re not alone.
To put it simply, the company incorporates multimedia platforms, including video content, NFTs, and others.
While that may seem like a big deal to the novices, the reality is that the business lacks stability and suffers from high financial distress.
Though the company has made some interesting acquisitions, they are unlikely to change its fortunes around for the foreseeable future.
Third Quarter Results and BBIG Stock
Vinco recently reported its third-quarter results, where it reported a significantly wider net loss from the prior-year period. It reported a net loss of $542.5 million during the quarter compared to just $2.8 million in the same period last year.
The massive increase in net loss was attributable to fair value changes and issuance of warrants. Moreover, the company reported a sizeable amount of costs about the consolidation of its operations and with its Lomotif transaction.
Revenues have declined by 11.5% to $2.23 million and have been weighed down heavily by the lackluster performance of its Edison Nation Medical division. Gross profit margins had also dropped 8.9% from 40.3% in the third quarter last year. The drop is primarily attributable to the decrease in revenues from its Edison Nation Medical division.
During the third quarter, Vinco focuses its efforts on implementing the necessary steps to build its internal resources.
Moreover, it has been working with a team of advisors to develop its business strategy and the relevant due diligence about its Cryptyde business and other transactions.
Continual Financial Distress
Despite the improvements to the company balance sheet during the quarter, Vinco remains in considerable financial distress. One of the main problems is that it always has needed a handsome amount of capital to fund its acquisitions. That’s its business model. BBIG is built around identifying and acquiring companies that could further its objectives.
As of now, the company believes it has sufficient cash to carry on its operations for the next 12 months. However, if the company’s capital raising plans became constrained, the company may struggle as a going concern.
After the third quarter, Vinco had a cash balance of $149.9 million. Moreover, it boasted an asset base of $337 million compared to just $28 million at the start of the year.
During the third quarter, it raised a whopping $193 million; $93 million pertains to common stock issuances from the exercise of warrants and the other $100 million from the proceeds of a convertible note.
However, its liabilities have also been increasing due to its massive working capital requirements, the impact of a convertible loan note, and a warrant liability of $458 million.
Bottom Line on BBIG Stock
Vinco Ventures continues to disappoint investors with its lackluster operating performance. Moreover, its deplorable earnings continue to weaken its financial flexibility as its liabilities outweigh its asset base by a fair margin.
Moreover, I expect BBIG stock to be more volatile after the recent management transition, as the new leadership team sets its sights on different areas such as profitability, growth, debt, and others.
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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.
