Despite delivering on a much-anticipated share distribution of a spun-off entity, Vinco Ventures (NASDAQ:BBIG) has struggled for traction. Shares ended the day up higher by just about 3%. Its spinoff Cryptyde (NASDAQ:TYDE) has proven more disappointing, hemorrhaging 67%. Yet a catalyst may be on the horizon for BBIG stock.
According to a midweek report from the Washington Post, Brendan Carr, a Federal Communications commissioner, shared in a tweet a letter addressed to Tim Cook and Sundar Pichai, chief executives of Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), respectively. In the document, Carr expressed concerns about Chinese ownership of popular video-streaming platform TikTok.
The FCC commissioner accused TikTok of harvesting “swaths of sensitive data that new reports show are being accessed in Beijing.” ByteDance, a multinational internet tech firm headquartered in Beijing and legally domiciled in the Cayman Islands, owns the platform. Since Apple’s and Alphabet’s Google app stores offer TikTok, Carr is requesting these tech giants reconsider their position in light of the potential security risks.
A Cynical Opportunity for BBIG Stock
The above matter isn’t the first time that TikTok aroused intense suspicions. When former President Donald Trump was in office, he signed a pair of executive orders designed to ban the platform in the U.S. As part of a solution, parent company ByteDance agreed to store all of TikTok’s user data on Oracle (NYSE:ORCL) cloud-based computer systems.
Given that most Americans are concerned about online privacy issues, TikTok’s threats to national security may be perceived as a grave dilemma.
Therefore, it’s not inconceivable that Vinco Ventures – and by logical deduction BBIG stock – could cynically benefit from the latest controversy. Vinco controls Lomotif, a video-sharing networking platform that competes against TikTok.
Investors Must Exercise Caution
Although the cynical narrative makes sense, it’s important for prospective investors to realize that businesses primarily succeed on their merits, not because of unusual and unforeseen headwinds against their competitors. Therefore, buying BBIG stock merely on potential legal issues with TikTok carries with it significant risks.
Granted, the idea of picking up shares of BBIG stock as a key competitor faces troubles is shrewd. However, if you’re going to play this game, you should do so with money you can afford to lose.
On the date of publication, Josh Enomoto 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.