With investors warming back up to a “risk on” mindset in recent weeks, it’s no surprise Vinco Ventures (NASDAQ:BBIG) shares have experienced a partial rebound. In the past month, BBIG stock has jumped by around 46%.
But while this small, speculative growth stock, which at one point in 2021 became a popular play among retail traders, has gone on another hot run (albeit more muted than prior rallies), I wouldn’t view this as a sign that a continued rebound is in store for shares in this digital holding company.
Mostly, because the issues that knocked it down to penny prices in the first place continue to persist. Although Vinco has made progress in some areas, such as consolidating ownership of its key asset, other red flags remain.
In 2022, I referred to Vinco as a “no-go” situation. In 2023, this is still the case.
| BBIG | Vinco Ventures | $0.74 |
BBIG Stock and its Latest Short-Lived Rally
Although difficult to prove, the “meme stocks” phenomenon appears to play a big role in moving this stock upwards and downwards. Since Vinco’s initial “to the moon moons” during 2021’s “meme stock mania,” subsequent short-lived rallies for the stock last year and this year appear to correspond to brief renewals of this investing trend.
Since January, investor sentiment has improved, as signs emerge that macro issues are beginning to ease. In turn, inflows into more speculative plays have picked back up.
So too has buzz surrounding the supposed “squeeze potential” of heavily-shorted stocks. These two factors, especially the “squeeze factor,” has resulted in big rallies for “meme plays,” BBIG stock included.
But as InvestorPlace’s Bret Kenwell pointed out, when discussing the stock’s January short-squeeze, this is a short-lasting catalyst. Although shares have spiked once again since Kenwell made this argument on Jan. 17, this latest boost for BBIG is losing steam. Pretty soon, the focus will shift back to the stock’s underlying fundamentals.
If Vinco’s fundamentals were strong, this wouldn’t be an issue. Unfortunately, that is far from the case. As I mentioned above, many of the longstanding issues with this company have not gone away.
One Potential Positive, but Many Certain Negatives
Since last writing about BBIG stock, there’s been one major change with the underlying company. Vinco has consolidated its ownership of what is likely its most promising “venture,” Lomotif. On Dec. 19, the company announced that it had bought out ZASH Global Media’s 50% interest in ZVV Media Partners.
ZVV Media Partners owns an 80% stake in Lomotif, which is a video-sharing app that is positioning itself as an alternative platform to TikTok. If this early-stage platform, which claims to have tens of millions of monthly active users, continues to scale up, BBIG shareholders now stand to reap a greater portion of the upside.
However, this one potential positive is far outweighed by the many certain negatives still at hand with Vinco. Although the “boardroom battle” that made headlines last year has resolved peacefully, the company has yet to install a permanent leadership team. BBIG continues to be delinquent in its financial filings. It has yet to release financials for the quarters ending June 30, 2022 and Sept. 30, 2022.
Besides leaving shareholders in the dark regarding Vinco’s current financial state, because of this filing delinquency, along with other compliance issues, BBIG faces a possible delisting from the Nasdaq exchange.
The Verdict
Like its other short-lived rallies over the past years, there’s a strong chance Vinco shares pull back once again. Even if the company manages to resolve its Nasdaq compliance issues, avoiding a move for the stock to the over-the-counter (or OTC) market, merely getting its house in order may not fuel another rally.
In fact, if BBIG gets up-to-date with its financials, it may reveal that the company’s financial health is far than currently believed. This in turn could result in another major sell-off for shares.
Of course, that’s not to say this is an all-but-certain outcome for Vinco, but the fact these figures have not been released signals that they are not likely to inspire confidence once available to the investing public.
With the story with BBIG stock the same as it ever was, it’s best to continue staying away.
BBIG stock earns a D rating in Portfolio Grader.
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.