In my last article on Vinco Ventures (NASDAQ:BBIG) stock, I took a cautious view on this once-popular meme play.
photo of Lomotif app download page on a smartphone
Source: shutterstock.com/Postmodern Studio
While suspicious of its red flags, I said that BBIG stock looked to have big potential. Mainly, due to its key holding, an interest in video sharing site (and aspiring TikTok competitor) Lomotif.
All in all, it was a stock to consider buying, I said, only if it fell to lower prices and provided more clarity about its financials.
Since then, it’s met some of this criteria. At $3 per share, it’s about 40% cheaper than it was when I first wrote about it. The company has also released more financial details, as seen in its latest quarterly earnings release.
So, are shares a buy? Not so fast. Shares are cheaper now, only because investors are fleeing in droves after Vinco Ventures reported heavy quarterly losses.
There’s now more information, but it’s still an unclear picture. As was the case a few weeks back, it remains difficult to determine a reasonable price for the stock.
While it’s falling to bargain prices, it’s a mystery whether it’s a bargain.
I’d check back if it decides to simplify its corporate structure and make it less byzantine. For now, though, staying away is still your best move.
BBIG Stock and Its Latest Financials
For the quarter ending Sept. 30, Vinco Ventures reported heavy losses and not a whole lot of sales.
Revenue for the quarter came in at $2.23 million, versus $2.52 million reported in the prior year’s quarter. Net losses of $542.3 million, or $7.59 per share, came in well above the $2.5 million in losses (3o cents per share) reported in Q3 2020.
As my InvestorPlace colleague William White wrote Nov. 23, news of its big negative EPS (earnings per share) number caused BBIG stock to plunge,
You may question whether this was an accurate reaction on the part of Mr. Market. After all, these were accounting losses. Primarily due to a $287.1 million change in the fair value of the company’s warrant liability and a $206.9 million accounting loss from the issuance of warrants.
Yet while it’s not as if Vinco literally burned through $546 million last quarter, this figure does highlight the heavy amount of shareholder dilution that’s been going on with the company lately.
Per its latest Securities and Exchange Commission (SEC) reporting, there are now around 137.1 million outstanding shares. That’s a massive jump from the 65.5 million outstanding shares reported back in August, and its 107 million outstanding share count as of Sept. 30.
Granted, the counter to this increased share count (due to the exercise of warrants) is increased cash on its balance sheet. But given the time lag between quarterly financials and now, it’s unclear whether you are getting a good deal, or overpaying, for Vinco at $3 per share.
Still Tough to Determine Fair Value
This company sports a market capitalization of around $425 million. While we have more information about its financials, it’s still hard to determine whether this is a fair price or an inflated price for this diversified company.
It’s still difficult to decipher its balance sheet. The company holds key assets, such as its 80% stake in Lomotif, plus its ownership of Adrizer, through a joint venture called ZVV. Vinco owns 50% of ZVV, with the other half held by Zash Global.
However, Vinco consolidates ZVV’s balance sheet into that of its wholly-owned subsidiaries including its Cryptyde non-fungible token (NFT) unit, which it plans to spin off next year.
Also, with the time lag between the Sept. 30 end date of its latest financials, we know about the share count increase from the exercising of warrants. What we do not know is how much additional cash was added from this warrant being exercised.
Considering Vinco’s tendency to selectively disseminate information until it is required to do so, it probably won’t be until the next 10-Q filing (at the very least) that a clearer picture of the company emerges.
Until More Information Emerges, Lay Off
As the Reddit set makes its exit out of Vinco, don’t consider it to be a great “buy the dip” opportunity. At least, until the company decides to cut it out with the opaqueness.
A step in the right direction with this would be for it to finalize its still-uncompleted merger with Zash.
The situation will also become easier to understand as more of its outstanding warrants are exercised.
According to page 15 of the latest 1o-Q, as of Sept. 30, there were options/warrants equivalent to 126.1 million shares. Based on the increased share count between Sept. 30 and today, some but not all have been exercised.
A few months back, BBIG stock was a great meme play. Down the road, it may be an interesting long-term bet on Lomotif. For now, it’s best to hold off on it.
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On the date of publication, Thomas Niel 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.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
