In past articles on Vinco Ventures (NASDAQ:BBIG), one of my biggest reservations with BBIG stock has been a lack of information. As I put it back in March, this digital holding company’s management likes to slowly reveal important information.
That said, with the release of its 10-K annual filing with the Securities and Exchange Commission (SEC) on April 15, some of the questions raised about the company in recent months have been answered. But does this help to make the case for buying it? Not so fast. Avoiding the stock continues to be the best move.
Why? With the impact of its continued dilution (through the sale and exercise of warrants) accounted for, it’s clear that while it’s a “cheap stock” (in terms of price), BBIG stock is no bargain. Its underlying value is less than its current market capitalization of around $460 million. Vinco’s cash position (around $187.6 million) is countered by a $198.6 million liability from outstanding warrants.
Yes, there’s a lot of potential with its key operating units. I’m talking about Cryptyde, its soon-to-be spun-off crypto mining and non-fungible token (NFT) unit.
I’m also talking about its stake in Lomotif, a video sharing app similar to TikTok. However, it’s hard to argue that these assets, plus another holding (AdRizer) have a present value that exceeds $460 million. Previously, the company has said it plans to spin-off Cryptyde on a one-for-ten basis. That gives this segment an implied valuation of $46 million. Even if Lomotif is a TikTok in the making, keep in mind that ZVV (a joint venture between Vinco and its would-be merger partner, ZASH Global), paid just under $110 million for its 80% stake.
Still an early stage business, it’s likely not worth much more than today. That makes Vinco’s indirect 40% stake likely worth around $55 million. ZVV was also the original owner of its AdRizer segment. Back in February, the company bought this segment outright from the joint venture, for total consideration of $38 million. Add it all up, and you don’t even get to half of this stock’s current market capitalization. Until there’s more information, providing justification to raise the value of its key holdings, the story remains the same. Hold off on BBIG stock.
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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.
