One of the more unorthodox companies in the equities market, digital media and content technology development firm Vinco Ventures (NASDAQ:BBIG) occasionally makes serious noise, thereby drawing speculators to the opportunity. On Thursday, BBIG stock popped up around 7% in late afternoon trading after two potential catalysts – a geopolitical matter and a crackdown on potential conflicts of interest – bolstered its market value.
First, Vinco Ventures’ main competitor, China’s ByteDance – which developed the video-sharing social networking service TikTok – attracted scrutiny on Capitol Hill when lawmakers on the Senate Intelligence Committee requested that the Federal Trade Commission (FTC) investigate the popular app.
Specifically, Sens. Mark Warner and Marco Rubio, the chair and ranking member of the committee, expressed concerns about how TikTok parent ByteDance had “repeatedly accessed US users’ data” and therefore “raises fresh doubts about the truthfulness of TikTok’s congressional testimony on its privacy practices,” according to a CNN Business report.
The controversy hits home for Americans, as most of them have expressed substantial concerns about online privacy. Factor in this issue, and you potentially have a situation where Washington could ban TikTok. Of course, such a development would be cynically favorable to BBIG stock, as Vinco owns rival vide-sharing platform Lomotif.
Still, that’s not the only possible tailwind for the underlying company that has speculators excited.
BBIG Stock and the Dark Pool
On Reddit and other public forms, stakeholders of BBIG stock expressed anger at Susquehanna International Group and its conflict of interest that may have adversely affected Vinco Ventures. In one Reddit user’s disclosed letter to Vinco’s legal counsel, the document expressed dismay that Susquehanna acted as the primary designated market maker while also lending out BBIG shares for the purposes of shorting them.
As well, the letter went on to explain that Susquehanna is a major stakeholder of TikTok (through equity ownership of ByteDance) and therefore such exposure represents a conflict of interest.
Indeed, the Wall Street Journal noted in October 2020 that Susquehanna – a secretive firm that specializes in options trading – hit the “jackpot” with TikTok, as it owns about 15% of ByteDance. As well, information from Fintel indicates Susquehanna engaged in significant options trading in BBIG stock throughout much of 2021 and until May of this year.
In a tweet through its Zash account, Vinco stated, “We hear you loud and clear! Zash has recently engaged an investigative law firm to investigate dark pool activity with certain market makers and BBIG & TYDE.”
Dark pools refer to private exchanges “for trading securities that are not accessible by the investing public,” according to Investopedia. One of the controversies of this shadowy platform is that it allows institutional investors to place large trades without rumbling the market. However, this lack of transparency tempts and enables conflicts of interest and other illicit activities.
Therefore, exposing light to this “underground” world could end up providing a fairer framework for BBIG stock.
Investors Should Still Tread Carefully
Despite the positive implications behind the latest news cycle, prospective investors of BBIG stock should exercise extreme caution. Mainly, Vinco Ventures has proven to be a choppy and unreliable trade, making it only appropriate for risk-hardened market participants.
Second, no guarantee exists that a TikTok ban will materialize. Even if it does, Lomotif will face a mountain of competition. Ultimately, traders should keep a realistic view of BBIG stock.
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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.