Vinco Ventures, Inc. (BBIG) in Bethlehem, Pa., is a consumer product research and development, manufacturing, sales, and fulfillment company in North America, Asia-Pacific, and Europe. The company focused on the blockchain and the burgeoning NFT market in 2021, introducing its first NFT streaming movie soundtrack last September.

The shares of the digital media merger and acquisition company gained significantly in the early months of 2021 due to social media-driven hype and its considerable short interest, which triggered a speculative play. However, its price rally could not be sustained due to its bleak underlying fundamentals. The stock is up 98.6% in price for the past year but has slumped 31.3% over the past six months to close yesterday’s trading session at $2.88. The stock had rallied to its 52-week high of $12.49 on September 8.

The company is attempting to compete with the social media behemoth TikTok, with its Lomotif app showing potential as “the next TikTok.” BBIG is actively promoting its app in the United States and India, where TikTok is banned, providing the company a great opportunity to cater to its large population. Although this sounds interesting, Lomotif is not yet as popular as TikTok, and it might take some time to gain a market share on par with TikTok.

Here is what could shape BBIG’s performance in the near term:

Cryptyde Spin-off

BBIG announced the planned spin-off of its subsidiary Cryptyde, Inc. last year. The move will make Cryptyde a stand-alone, publicly-traded Nasdaq listed company under the ticker symbol TYDE this year. The majority of Cryptyde’s board of directors consist of former Vinco board members. “We believe the spin-off will provide significant benefits for Cryptyde, Vinco, and their shareholders, enabling each company to enhance its strategic and operational focus, and improve resource allocation,” said Lisa King, Vinco’s Chief Executive Officer. Cryptyde is focused solely on leveraging blockchain technology in consumer-facing industries. However, the volatility in digital asset prices could foster additional risks and uncertainties. Furthermore, some experts believe the crypto market is due for a crash in the coming months.

Stretched Valuation

In terms of trailing-12-months EV/Sales, BBIG is currently trading at 23.41x, which is 1,537% higher than the 1.43x industry average. Also, its 5.86 trailing-12-months Price/Sales ratio is 388.7% higher than the1.20 industry average.

Lackluster Financials

BBIG’s revenue decreased 11.5% year-over-year to $2.23 million in its fiscal third quarter, ended September 30. This was primarily due to a decrease in personal protective equipment sales by its Edison Nation Medical division. Its gross profit margin also declined to 31.4%, versus 40.3% in the same period last year. Its net loss attributable to BBIG came in at $542.46 million, indicating a substantial increase from its $2.83 million year-ago value, while its net loss per share came in at $7.59, a 2,430% increase year-over-year. The increase in its net loss is due primarily to the issuance of warrants during the quarter, the change in estimated fair value of outstanding warrants, and the costs associated with the Lomotif transaction.

POWR Ratings Reflect This Bleak Prospects

BBIG has an overall F rating, which translates to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has an F grade for Quality. This is justified because its negative 278.64% EBITDA margin compares with the 12.80% industry average.

BBIG has an F grade for Value. Its stretched valuations justify this grade.

Of the 67 stocks in the D-rated Consumer Goods industry, BBIG is ranked the last.

Beyond what I have stated above, one can also view BBIG’s grades for Sentiment, Growth, Momentum, and Stability here.

View the top-rated stocks in the Consumer Goods industry here.

Bottom Line

BBIG’s Cryptyde spin-off is attracting investors’ attention. The stock soared 23.1% in price in intraday trading yesterday. However, its gains are not supported by fundamentals, and thus, it could foster volatility in the stock and cause its shares to retreat in the near term. So, investing in the stock could be a risky play. Thus, we think it might be best to avoid the stock now.

How Does Vinco Ventures, Inc. (BBIG) Stack Up Against its Peers?

While BBIG has an overall POWR Rating of F, one might want to consider investing in the following Consumer Goods stocks with an A (Strong Buy) rating: Mannatech, Incorporated (MTEX), Société BIC SA (BICEY), and Ennis, Inc. (EBF).

BBIG shares fell $0.03 (-1.04%) in premarket trading Thursday. Year-to-date, BBIG has gained 21.01%, versus a -0.67% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

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