Should You Give the Very Volatile Vinco Ventures a Second Chance?

One of the more confusing companies that have popped on the search engine radar, Vinco Ventures (NASDAQ:BBIG) nevertheless “justifies” its time in the spotlight because of its exceptional volatility. While its viability as an investment is under some question, no one doubts the trading potential of BBIG stock.

vinco ventures (BBIG) logo on an orange/red background
Source: vincoventures.com

While plenty of folks talk a big game about seeking alpha, what they really mean is that they’re seeking beta. How else can you explain the phenomenon of meme trades, of which BBIG stock could be a considered a part? True, alpha represents the excess return of an asset relative to a benchmark index. However, to get robust alpha, you need beta — the asset’s volatility relative to the overall market.

In the case of BBIG stock, that beta is at 0.21 as of this morning.

Think of it this way. Alpha is the car you need (sensible, practical, something your significant other will appreciate) while beta is the car you want (sleek, sexy but liable to produce divorce papers).

Of course, if you’re InvestorPlace’s own Louis Navellier, the car you need is also the car you want. That’s basically BBIG stock in a nutshell, where the fantasy becomes the reality. Scroll down to the chart below and you’ll see what I mean. Throughout 2021, the wild undulations mean that if you time your entry points just right, you could make off like a bandit.

Therefore, speculators should have no problem convincing themselves BBIG stock is a worthwhile wager. But for the buy-and-hold investor, it’s a different story. As my colleague Patrick Sanders explained, Vinco Ventures entered into a reverse merger with Zash Global Media and Entertainment, with the latter becoming the controlling company in the transaction.

Interestingly, as Sanders also stated, “Zash Global Media was founded by Ted Farnsworth, the former chairman of MoviePass.” And that’s where the concerns lie.

Confidence Matters for BBIG Stock

A few months back, I came across the story of Cmdr. Cameron Aljilani, the former commanding officer of the attack submarine USS Connecticut. He and executive officer Lt. Cmdr. Patrick Cashin and Chief of the Boat Cory Rodgers were removed from their positions at the direction of U.S. 7th Fleet commander Vice Adm. Karl Thomas.

On Oct. 2, 2021, the Connecticut “collided with an uncharted underwater seamount in the South China Sea.” Personally, I felt bad that Cmdr. Aljilani was relieved of duty due to a loss of confidence by his senior officers. I’m no submarine expert but from what I understand, submarines must turn off their sonar in that part of the world to avoid detection.

However, while the matter was a single mistake, the Navy must have found it an excruciating embarrassment. We’re supposed to project power to the world (especially to China), not incompetence. So, whether Cmdr. Aljilani had an unblemished record or not, he had to take responsibility.

BBIG price chart 1-yr through 02-04-2022
Click to Enlarge
Source: Trading View

And that brings me to BBIG stock. As Sanders reminded us, the Farnsworth-chaired MoviePass was an “all-you-can watch movie ticket subscription.” However, the sustainability of the business model was a concern, culminating in a permanent shutdown.

Now, it appears that Farnsworth wants to sell another kind of investment, one that’s involved in product research, social media and even cryptocurrencies for good measure. The thing is, I agree with my colleague: I don’t have a ton of confidence with BBIG stock.

Look, I’m not someone to rag on a person for a misstep. Everyone (well most folks, maybe not cold-blooded murderers) deserves a second chance. However, the MoviePass situation was an utter disaster. And the confusing nature of Vinco Ventures — its spray-and-pray business model — has me worried about an encore performance.

It’s a Pull of the Slot Machine

As I said earlier, if you’re the gambling type, there’s plenty of material to work with regarding BBIG stock. Over the trailing year, shares have ranged in price from $1.95 to $12.49. Further, with options trading, you can play both ends of the table and milk this bad boy for all it’s worth.

However, it’s also worth reminding that if you play this game, BBIG stock lost 41% since May 2018. So if you decide to participate, I would treat it like a leveraged exchange-traded fund, one that will punish you for staying in the investment for longer than its prospectus advises.

For everyone else, you got to look out for number one. I’m all for second chances and not keeping a record of wrongs. However, when you’re talking about money, you’ve got to exercise a tad bit more discretion.

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.


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