If you’re in the market for a diversified, tech-centered investment, Vinco Ventures (NASDAQ:BBIG) stock may seem like a deal, but we should look deeper.
There’s no denying that BBIG stock is affordable, but whether it’s actually a good value is a different matter entirely.
One thing that’s interesting about this stock is that some folks who have traded it probably weren’t aware of what Vinco Ventures does. That’s because they were treating it as a meme stock, and perhaps the company’s fundamentals didn’t matter too much.
However, the meme-stock trade unwound a while back, and now fundamentals do actually matter. In other words, don’t count on Reddit traders to keep BBIG stock afloat in 2022.
As we get to know the company a little bit better, we might appreciate Vinco Ventures’ recent foray into digital marketing and artificial intelligence (AI).
At the same time, there are specific concerns about the company’s less-than-rock-solid bottom line.
A Closer Look at BBIG Stock
In 2021, some Reddit users were on the hunt for low-priced stocks to target for a short squeeze. Was BBIG one of them?
Most likely, yes. Otherwise, it would be difficult to explain why, in January 2021 and at the height of meme-stock mania, the Vinco Ventures share price exploded from $1.36 to $5.
It would also be hard to justify BBIG stock’s crazy rally from $2.19 in August to $12.49 in September of that year. Meme dreams were coming true, evidently.
Fast-forward to today, and Vinco Ventures shares were trading at $3 and change. For anyone who bought during the hype phase and is still holding the bag, the good news is that there seems to be some recent support at $2.
But again, let’s not confuse a low share price and a great value. After all, cheap stocks can always get cheaper unless they’re at zero.
The Adventures of Vinco Ventures
Vinco Ventures is basically a holding company, and it takes some effort to untangle its subsidiaries.
Just to give you a few of the details, Vinco Ventures owns a social media platform called Lomotif, which is basically like TikTok but focused on India.
On top of all that, Vinco Ventures has a pending merger with media and entertainment company ZASH Global.
As Louis Navellier and the InvestorPlace research staff pointed out, both companies, “though sharing the same management teams, remain independent.”
In case all of that isn’t complicated enough for you, Vinco Ventures just announced its acquisition of AdRizer, a “provider of technology solutions that automate the use of artificial intelligence for digital advertising analytics and programmatic media buying.”
The AdRizer buyout won’t be cheap, as it will cost Vinco Ventures $38 million in cash paid and up to 10 million in stock.
AdRizer may not be worth the price. What Vinco Ventures is getting, most of all, is AdRizer’s technology platform, Cortex.
This platform provides “real-time analytics for marketing spend and revenue optimization” for advertising campaigns.
It’s evident that Vinco Ventures plans to use Cortex to help monetize Lomotif. It’s questionable, though, whether Vinco Ventures can afford to make any expensive acquisitions right now.
Consider this: in the nine months ended Sept. 30, 2020, Vinco Ventures incurred a net loss from continuing operations totaling $7,908,524. The net loss from the equivalent period of 2021 was a staggering $787,324,086.
In light of a roughly nine-fold net-loss increase, perhaps it’s time for Vinco Ventures to dial back the spending. Wouldn’t you agree?
The Bottom Line
AdRizer’s AI-enhanced ad monetization platform will complement Lomotif perfectly. Or at least, that’s what Vinco Ventures hopes will happen.
Only time will tell whether Vinco Ventures’ complex web of sub-businesses will enable the company to turn a profit.
For the time being, BBIG stockholders should insist that Vinco Ventures curb its spending for a while and work toward profitability. Adding AdRizer, unfortunately, could end up subtracting from Vinco Ventures’ bottom line.
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.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.