With a penny stock like Vinco Ventures (NASDAQ:BBIG), looks can be deceiving. On the one hand, a stock that falls from $3.38 (its March 22, 2021 closing price) to $3.04 (its March 22, 2022 opening price) in 12 months doesn’t feel that bad. But if you had invested in BBIG stock at its $12.49 peak, you’d have lost 76% of your investment now.
BBIG stock was caught up in the meme stock trade in 2021. However, as that bubble has burst, investors are being more selective when it comes to the stocks they invest in.
It doesn’t mean that speculative stocks can’t work, but they have to meet certain criteria. Their business model has to be in a sector that’s expected to grow; they have to be showing growing revenue (at least) if not a meaningful path to profitability. And they should be providing financial information that allows investors to estimate the value of the underlying company.
Currently, Vinco Ventures doesn’t check any of those boxes. At least not for me. And it doesn’t seem to be drawing from institutional investors or analysts.
However, I imagine there are several retail investors interested in BBIG stock. If there weren’t, I wouldn’t see so many articles about it from my InvestorPlace colleagues. Nevertheless, I hope you’re either playing the long game or successfully day trading. Because that’s the only way you can justify a position in Vinco Ventures at this time.
There’s a Business in BBIG Stock Somewhere
Vinco Ventures has always had a confusing business model. One business unit, Cryptyde, is involved in cryptos and NFTs. That may have been what excited investors in 2021 when the stock soared to its 52-week high of $12.49. But the shine has come off cryptocurrencies and that is shaking out loose hands. That is also enough reason for Vinco Ventures to sell off its Cryptyde unit.
So the company is making a pivot into the world of media and digital advertising. Vinco Ventures plans to merge with ZASH Global. This means Vinco will also own Lomotif, a company that is making a push to be the next TikTok. The company also recently acquired AdRizer, a digital advertising service.
In January, I was cautiously optimistic about the fortunes of BBIG stock. I looked at Lomotif and AdRizer being an interesting lock-and-key that could propel Vinco Ventures. My rationale was that Lomotif can generate traffic with original, short-form video content. AdRizer would then give the company a way to monetize that traffic.
I also noted that the company is planning to move into areas such as augmented reality and virtual reality live streaming.
All of this means that if you look at Vinco Ventures in a vacuum, you could say there’s significant revenue generating potential. But this is a very competitive sector. And as a company that is not yet profitable and generating very little revenue, the definition of success may be elusive.
Waiting For More Earnings
Vinco Ventures has yet to report its fourth-quarter earnings. By itself, that’s not troublesome. However, the company’s revenue has been going down. In all likelihood, that’s due to the decline in cryptocurrency revenue from its Cryptyde unit.
Which brings me back to what I wrote earlier. Ideally, investors would prefer to see a company’s revenue growing. Right now, revenue is dropping along with the share price. And with no clear idea of when Lomotif and AdRizer will start to help the top line (let alone the bottom line), investors are flying blind.
Wait For BBIG Stock to Show You More
As I look at the trajectory of Vinco Venture’s earnings and revenue, there’s not much to get excited about. And as Thomas Niel has warned investors, the company has a reputation for not releasing important information quickly. That only adds to the cloudiness of the company’s business model.
Without that clarity, and with short interest remaining high, I can’t recommend investors take a long position in BBIG stock. However, if you’re an aggressive day trader, there may be some appeal to the stock.
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On the date of publication, Chris Markoch 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.