Vinco Ventures Confuses Investors With Its SPAC-like Narrative

InvestorPlace – Stock Market News, Stock Advice & Trading Tips

Investorplace.com – InvestorPlace

Easily the stocks I least like to cover, Vinco Ventures (NASDAQ:BBIG) is the bane of my existence. While some companies can be a bit confused about what they actually do, Vinco really takes the cake. It’s a self-inflicted stun grenade — or a flashbang to use special operator language — that has BBIG stocks reeling in confusion.

I’m not the only one who feels this way. My Investor’s Place colleague Ian Bezek admits the same, stating that it is a “complicated company. Vinco plans to merge with ZASH Global, acquire digital advertising service AdRizer and divest its crypto business, Cryptyde. As a result of all these moves, BBIG shares are quite volatile.”

Agile? I would say. On a year-to-date basis, BBIG’s shares did not drop too much, “only” down about 13%. Given the state of soaring consumer inflation, geopolitical flashpoints and the recovery process — and lingering tensions — from the coronavirus pandemic, a loss of 13% is nothing to worry about.

What’s worrying, however, is that it’s down nearly 77% over the past six months. That will draw a lot of attention to BBIG stocks — mostly negative.

However, this being the new normal for society and the stock market, is it possible that BBIG stock could soar higher as speculative trading — you know, the whole buy low, sell high concept that has become a meme?

In the strange world we live in today, I will not dismiss any opening as impossible, no matter how narrow it is. But this time, I’m not too sure that Vinco Ventures will find its way north in a sustainable manner.

It all has to do with reputational damage.

SPAC Fever Hurts BBIG Stock

Now, everyone saw the destruction Virgin Galaxy (NYSE:SPCE), one of the most popular business combinations that occur through special-purpose acquisition companies. Since the January open, the SPCE is down about 44% and over the last 12 months, it’s down about 72%.

While I don’t equate BBIG stock with SPAC, the point is that these shell companies are relatively complex and somewhat exotic instruments. Rather than a company launching its own initial public offering, a blank check company instead goes public and joins the target, thus offering a backdoor to the right exchange.

Meanwhile, there are warrants and other dilutive elements that can surprise investors inexperienced with SPAC. So far, the overall message has become clearer. You should do your due diligence because many SPACs are just instruments to take advantage of unsuspecting retail buyers.

Again, while I’m not suggesting that BBIG stock is another SPAC game, the two are similar in the sense that they feature a complex business structure that has so far left those with high valuations holding a bag of smelly stuff.

Furthermore, as it becomes clear that this type of convoluted investment does not have the interests of retail shareholders in mind, they may lose interest due to reputational damage. That’s my concern with holding Vinco long; Finally, ordinary people are wise and they move on to more stable or proven ideas.

And as Bezek and other colleagues of mine have noted, Vinco is not helping itself by facilitating several different acquisitions and other transactions without a clear focus on profitability. As I said, ordinary people are aware of such crimes.

No Time for Risky Assets

Another factor that is likely to hurt BBIG stocks moving forward is that the outside is not in favor of highly speculative ideas. Heck, even many of the pioneer blue chips are facing pressure due to the double uncertainty of rising prices and geopolitical conflicts.

Of course, in the end, people have the freedom to do what they want. But I think the smart game is to watch Vinco Ventures from the sidelines.

On the date of publication, Josh Enomoto does not have (either directly or indirectly) a position in the securities mentioned in this article. Opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing Guidelines.

More From InvestorPlace

Vinco Ventures Post Confuses Investors With its SPAC-like Narrative first appeared on InvestorPlace.