- Once a meme, always a meme still applies in Vinco Ventures (BBIG).
- BBIG stock is demonstrating atypical strength, but should it be trusted?
- Know who’s company you keep when buying BBIG stock.
By most accounts, Tuesday was an ugly one. As such, it might come as little surprise to learn meme play Vinco Ventures (NASDAQ:BBIG) stock finished lower.
A mostly quiet news session finished with Wall Street bearishly re-evaluating E.U. sanctions against Russia, Covid-19’s BA.2 subvariant and inflation. And higher multiple tech stocks like Tesla (NASDAQ:TSLA) and Nvidia (NASDAQ:NVDA) led the decline with losses of 5%.
But riskier meme stocks saw even greater damage on the session. AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME) experienced losses of 9% and 10%, respectively. Yet the bearish dynamics went largely unnoticed in meme peer BBIG stock.
Shares may have finished lower, but BBIG also closed the session in lockstep with the Nasdaq’s much lighter 2.25% loss. What’s more, Vinco Ventures avoided larger selling pressure despite being a top-performing meme stock with shares up nearly 10% in 2022.
With that in mind, let’s take a closer look at how you should approach BBIG stock today.
Vinco Ventures Has Been All Show So Far
Blockchain. The metaverse. AI-driven advertising analytics for business. Mergers. Vinco Ventures has a lot seemingly going for it. At least on paper.
For as many days as BBIG stock has been a notorious meme stock, Vinco Ventures has been spreading its business tendrils into some very interesting growth markets.
BBIG’s short-form, social media video platform Lomotif is poised to compete against the space’s 800 lbs. gorilla TikTok.
The company’s blockchain subsidiary called Cryptyde aims to leverage smart contract technologies in consumer-based markets. And its recent AdRizer acquisition is set to provide solutions for digital advertising analytics and programmatic media buying.
But when investors are buying BBIG stock what they’re really latching onto are awful fundamentals and a company whose only manufacturing feats since becoming a favorite of Reddit’s apes are massive losses, cash burn, shareholder dilution and alluring PR releases. BBIG is promising everything and delivering nothing … so far.
However, some bulls might argue to have patience as there’s still a pending merger with media and entertainment company ZASH Global.
Is BBIG Stock Something Else?
Source: Charts by TradingView
There are always two sides to every story in the stock market, and that even applies to BBIG stock. Despite business prospects that appear suspect at best, it remains an attraction for apes.
To walk the aisle among BBIG stock’s resident bulls, the past four months of mostly lateral consolidation and market-defying gains this year could reasonably mark a turning point higher for Vinco shares.
It’s not a classic higher-low congestion pattern relative to last August’s single candle pivot, but it has the earmarks to possibly excite technical traders into action. And with stochastics entering oversold territory and bearish short interest of around 18%, shares could reasonably break higher toward $4.50 as a short-term play.
On the other hand, bulls could be facing a nearby, longer-term failure into lower-valuation obscurity. A still decent size market cap of around $555 million is a lot of “Benjamins” on the table if BBIG stock remains largely about nothing.
Moreover, with 18% short interest wagering against BBIG’s ability to become a viable tech holding company, that same four month long congestion pattern is a critical battleground from where bears can drag shares lower, backed by apish bulls throwing in the towel once and for all.
Bull or Bear, It Doesn’t Matter
If investors are oddly attracted to riskier investment propositions in the stock market, BBIG stock falls squarely into that category. Just remember what kind of company you’re dealing with and don’t dare to dream too big if a buy turns into a profit.
I’d also strongly advise using a slightly out-of-the-money, closer-in call for leverage which also keeps potential losses limited to the purchased premium and a fraction of Vinco’s share price.
Similarly, if you’re intrigued by stocks like this, which have lackluster fundamentals relative to their valuation, a long put or purchased put vertical are strategy can keep you looking much smarter than the average BBIG sock bear.
On the date of publication, Chris Tyler does not hold (either directly or indirectly) any securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.