Vinco Ventures (NASDAQ:BBIG) is a somewhat complicated investment. The firm is not tied to any one particular industry or economic theme. Rather, Vinco is driven by adherence to its so-called “B.I.G.” strategy which stands for buying, innovating and growing. This is also where the BBIG ticker symbol came from. In theory, Vinco is supposed to be able to buy, innovate and grow across various businesses and industries, serving as a sort of holding company for a portfolio of technology and media investments.
In practice, however, Vinco has struggled to execute on its B.I.G. strategy. As our Thomas Niel recently explained, Vinco’s latest annual report didn’t contain much new information either. Vinco is still trying to build out at least three different businesses, but there is little tangible progress to report, at least as far as things such as revenues and profits go. For example, the company’s Lomotif social media business “had not generated any significant revenues” through the end of 2021, according to Vinco’s annual report.
Overall, in 2021, Vinco generated just $9.8 million of revenues, which was down meaningfully from the $12 million it delivered in 2020. Over the same period, Vinco’s operating loss exploded from $9 million to $88 million as Vinco went on an absolute spending spree without tangible results to be found for its efforts.
BBIG stock has been steadily trading lower in recent months as the flurry of hype around Lomotif failed to translate into financial results. However, on Friday, BBIG shares jumped once again. This came on news that Vinco is now ready to spin off its crypto business Cryptyde. Cryptyde will trade as its own company on the Nasdaq with the ticker symbol “TYDE.” Shareholders will get shares of TYDE at a 10:1 ratio to their current ownership of BBIG stock.
Traders are presumably bidding up BBIG stock on the news as this may lead to a short squeeze. The thinking goes that short sellers won’t want to stay involved in shares ahead of the spinoff, as it could become a riskier trade at the time of the TYDE deal going into effect. That said, it seems unlikely Cryptyde will be worth much at launch, given that all of Vinco put together generated less than $10 million in revenues last year.
On top of that, cryptocurrency prices have been in a sharp downtrend lately. So don’t expect TYDE stock to trade at a particularly high standalone valuation once it is a separate company. With that in mind, traders would be wise to lock in gains on BBIG stock, as the rally is likely to be fleeting.
On the date of publication, Ian Bezek 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.