Vinco Ventures, Inc. (NASDAQ:BBIG) stock is transitioning to become a digital media and content technologies firm from an end-to-end consumer products company in the United States. The company has 80% interest in Lomotif Private Limited (a video sharing app like TikTok) through its joint venture with ZASH Global Media and Entertainment Corporation.
On April 18, 2022, Vinco Ventures announced its fourth quarter and full year results. As already known, the company is slow in revealing information to the Wall Street. As such, investors has been cautious in investing in this stock despite several interesting news.
BBIG’s warrants have been diluting the present value of shareholders and weighing negatively on the stock.
In 2021, loss from warrants amounted to $656.5 million (or $10.3 per share). This is huge as total loss in 2021 was $713.2 million. This is also significantly higher than $5.1 million recorded last year.
Another point to consider is total revenues decreased 18.5% in FY 2021 (to $9.8 million from $12.0 million in FY 2020) despite the company gaining huge customer traction for its Lomotif social media platform from live streaming of popular entertainment events. Recent events hosted includes Okeechobee Music and Arts Festival, Electric Daisy Carnival (EDC) and Shaquille O’Neal’s Big Game Weekend Party “Shaq’s Fun House”. Management is yet to show some tangle results.
Going forward, the company is deploying its Lomotif platform in the Indian markets. Given, TikTok was banned from the country since June 2019, the platform is likely to gain traction. BBIG aims to launch the format to other markets around the world to enhance Vinco’s exposure and engagement of content.
I expect the company will have to resort to external financing to carry out its obligations and growth plans in FY 2022.
Vinco Ventures ended the year with $187.6 million in cash and cash equivalents and had short-term obligations worth $243.0 million.
These obligations include derivative liability of $198.6 million and short-term debt of $44.4 million. Given a high inflationary environment and rising interest-rates, BBIG might get unfavorable financing which can be detrimental to its already negative profitability.
So, what can be the positive catalysts?
The only positive catalyst seems to be Cryptyde’s dividend-spin off. BBIG’s non-fungible token business in early 2022. Cryptyde, Inc. has already filed its Form 10 registration statement with the Securities and Exchange Commission (SEC). The newly formed entity has already launched its crypto mining equipment reselling business and has welcomed its initial customers in Q1 2022. Cryptyde’s Freescape Metaverse characters have been developed and are expected to be launched in Q2/Q3 2022.
Although, lot of things are going on, the company is yet to deliver. Given, the uncertainties involved, I would not recommend investing in the stock.
On the date of publication, Sakshi Agarwalla 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.
