If you’re looking for a diversified, technology-focused investment, Vinco Ventures (NASDAQ:BIG) the stock may seem like a bargain, but we should look deeper.
There’s no denying that BBIG shares are affordable, but whether they’re actually good value is another matter altogether.
One interesting thing about this stock is that some people who traded it were probably unaware of what Vinco Ventures does. That’s because they treated it like meme stock, and maybe the fundamentals of the business didn’t matter too much.
However, even stock trading happened a while ago, and now the fundamentals really matter. In other words, don’t rely on Reddit traders to keep BBIG stock afloat in 2022.
As we get to know the company better, we might appreciate Vinco Ventures’ recent foray into digital marketing and artificial intelligence (AI).
At the same time, there are specific concerns about the bottom line below the strength of the business.
A Closer Look at BBIG Stocks
In 2021, some Reddit users were looking for low-priced stocks to target for a short squeeze. Was BBIG part of it?
Probably yes. Otherwise, it would be hard to explain why, in January 2021 and at the height of meme-stock mania, Vinco Ventures’ stock price skyrocketed from $1.36 to $5.
It would also be hard to justify the crazy rally in BBIG stock from $2.19 in August to $12.49 in September of the same year. Meme dreams were coming true, of course.
Fast forward to today, and Vinco Ventures shares were trading at $3 and changing. For anyone who bought during the hype phase and is still holding the bag, the good news is that there seems to be recent support at $2.
But again, let’s not confuse a low stock price with high value. After all, cheap stocks can always get cheaper unless they’re zero.
The Adventures of Vinco Ventures
Vinco Ventures is essentially a holding company, and it takes some effort to disentangle its subsidiaries.
Just to give you some details, Vinco Ventures has a social media platform called Lomotif, which basically looks like ICT Tac but focused on India.
Additionally, Vinco Ventures is building its crypto and non-fungible token (NFT) unit Cryptyde.
On top of all that, Vinco Ventures has a pending merger with a media and entertainment company. Global ZASH.
Like Louis Navellier and the InvestorPlace the research staff pointed out, the two companies, “although sharing the same management teams, remain independent.”
In case all this wasn’t complicated enough for you, Vinco Ventures has just announced its acquisition of AdRizer, a “technology solution provider that automate the use of artificial intelligence for digital advertising analytics and programmatic media buying.
The AdRizer takeover won’t come cheap, as it will cost Vinco Ventures $38 million in paid cash and up to $10 million in stock.
AdRizer may not be worth the price. What Vinco Ventures gets is primarily AdRizer’s technology platform, Cortex.
This platform provides “real-time analytics for optimizing marketing spend and revenue” for advertising campaigns.
It’s obvious that Vinco Ventures plans to use Cortex to help monetize Lomotif. However, it is questionable whether Vinco Ventures can afford to make expensive acquisitions at this time.
Consider this: In the nine months ended September 30, 2020, Vinco Ventures incurred a net loss from continuing operations totaling $7,908,524. The net loss for the equivalent period of 2021 was $787,324,086.
In light of a roughly nine-fold increase in net losses, it may be time for Vinco Ventures to cut expenses. Don’t you agree?
AdRizer’s AI-enhanced ad monetization platform will perfectly complement Lomotif. Or at least that’s what Vinco Ventures hopes.
Only time will tell if Vinco Ventures’ intricate network of sub-ventures will allow the company to turn a profit.
For now, BBIG shareholders should insist that Vinco Ventures limit spending for a while and work towards profitability. Adding AdRizer, unfortunately, could end up subtracting Vinco Ventures’ bottom line.
As of the date of publication, David Moadel had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.
David Moadel has delivered compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga and (of course) InvestorPlace.com. He is also the Chief Analyst and Market Researcher for Portfolio Wealth Global and hosts the popular YouTube financial channel Looking at the Markets.