While Vinco Ventures (NASDAQ:BBIG) stock languishes in the market graveyard, some traders continue to dabble in it.
Maybe it’s as a result of it being a possible gamma squeeze opportunity (as InvestorPlace’s Chris MacDonald discussed on Sept. 9), or for reasons more related to its fundamentals (namely, its stake in video-sharing app Lomotif).
I wouldn’t hold my breath when it comes to a gamma squeeze. So far, this has failed to play out. Furthermore, as negative overall market sentiment keeps dampening the appeal of meme stocks, it’s doubtful shares in this digital holding company will see the sort of en-masse buying necessary to drive such a squeeze.
As for the Lomotif catalyst? Even as the high potential of this key asset may have made this stock worth a closer look, this is no longer the case after some boardroom drama that played out over the summer.
BBIG Stock and Its C-Suite Shakeup
Vinco Ventures experienced an organizational shakeup over the summer as a battle broke out in its boardroom. Back in July, the faction of the company’s board associated with its strategic partner ZASH Global allegedly attempted to take over the company without full board approval.
As a result, the board removed the ZASH-associated insiders from their co-CEO roles, leaving John Colucci as its sole CEO. Besides sending BBIG stock sharply lower after all of this was disclosed to the public on July 25, it also led to the trading of shares being temporarily halted on the Nasdaq exchange, between Aug. 4 and Aug. 16.
This was due to the exchange requesting additional information from Vinco, most likely related to this incident. Since the company no longer had a majority-independent board, it was out of compliance with Nasdaq’s director independence rules.
After trading resumed, the stock surged back above $1 per share. Short-lived renewed excitement for meme stocks beat out any concerns about the boardroom/C-suite chaos. Shares have pulled back, but many traders are still oblivious to this factor. Even as the battle rages on and could still materially affect the company’s future.
What This Means for Its Lomotif Catalyst
The fight between Vinco and the ZASH-associated insiders (also known as the “Farnsworth Group,” after ZASH co-founder Ted Farnsworth) is far from over. It’s simply changed venues. The two groups are now duking it out in the courts, with the company suing the Farnsworth Group for its above-mentioned actions.
While the case plays out, former Co-CEO Lisa King has been reappointed per a court order. In addition, the court has also appointed a third, independent Co-CEO (Ross Miller). Both King and Miller will serve alongside Colucci.
Only time will tell whether the company will prevail in its case and perhaps receive compensation for damages caused by the Farnsworth Group’s actions. However, anything it receives monetarily could be severely outweighed by the negative effect this clash causes, which is bad news for BBIG stock.
As you may know, Vinco and ZASH co-own a joint venture that holds an 80% stake in Lomotif. The two entities have been at work to scale up the startup, which is very similar to TikTok. With the two parties now on bad terms, it’s unclear whether further development of Lomotif remains in the cards.
The Verdict on BBIG Stock
To say that the Lomotif catalyst could be coming off the table is more than mere speculation. On Aug. 15, Vinco announced plans to launch a completely different social media venture, using technology licensed from AI-Pros Inc. It may be gearing up to move on from Lomotif completely.
In short, it may be becoming far less likely this key potential catalyst will ever play out. It’s debatable whether this new social media “venture” of Vinco’s will get off the ground. Much less, achieve the kind of success Lomotif may have been able to achieve.
As there’s far more uncertainty behind its main positive (Lomotif), this may not be enough to counter its many negatives. These include a history of shareholder dilution, as well as delays in its financial filings. With all of this in mind, BBIG stock (which earns a D in my Portfolio Grader) is a no-go situation.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.