Vinco Ventures (BBIG) has become one of the most complex company structures to understand for most investors. Its business model thrives from making aggressive acquisitions of other companies. Yet over the last few months, the company’s stock has been making some big moves before becoming a victim of heavy shorting. BBIG entered into bearish mode since peaked at $12.49 in September 2021.
On Thursday, Vinco Ventures closed at $2.93 before the long weekend began, making it a security in the oversold category. Of course, all this depends on a series of much-awaited news from the company.
Whats the deal
Vinco, a digital holding company, wholly owns Cryptyde – an NFT (non-fungible token) business that’s in the last stages of its proposed spin-off. The Cryptyde unit also consists of holdings in Crypto mining and the now popular metaverse spaces.
Vinco also holds ZVV through its 50/50 joint venture with Zash Global, which includes an 80% ownership of Lomotif (TikTok competitor) and ownership of Adrizer. Although Lomotif is not as big as TikTok yet, The company has been promoting Lomotif, not only in the U.S. but also in India. With TikTok banned in India, Lomotif can become a major video-sharing platform.
The Numbers
With a market cap of just under $400 million (as of December 23rd, 2021), the short interest is around 20% of the free float. In their latest 10Q filings, Vinco has said that they have reached a deal to sell more warrants to an institutional investor. Priced at $3.27 per share, Vinco raised nearly $40 million from the deal after deducting expenses.
The Average Cost to borrow is 93.6%, and the number of shares available to short is nearly 600,000. As of November 30th, 2021, the number of Fail to Delivers is in the millions.
Catalysts
Every Short Squeeze requires volume – at astronomical levels. BBIG has been low in volume recently, and Thursday recorded just 8.03 million, with an average volume topping at 28 million. To put this in perspective, the week BBIG peaked at $12.49, volume clocked more than 300 million more than three times. The stock either needs shorts to be covered or positive news that will encourage other investors to buy BBIG shares to boost volume.
There are millions of FTD’s reported, and these shares need to be covered within 35 days.
The other catalyst would be more information on the Vinco-Zash merger. We still don’t have precise details on how it will benefit/affect existing Vinco shareholders. The Adrizer deal must be closed by December 31st, 2021; this could act as another catalyst to boost volume. The company is also yet to announce the record date for Cryptyde (TYDE) distribution and a potential launch date.
The options chain on January 21st, 2021, is bustling. Many contracts will be expiring on that day, with Call contracts value as high as $24.
The Verdict
Although all numbers point towards an imminent short squeeze – there is no guarantee that this will ever happen, and you could potentially end up losing a very high percentage of your investment. On the upside, BBIG stock is a high-risk, high-profit venture that is not suited for the faint-hearted. They have made many acquisitions recently and have more than $40 million cash in their bank. The company’s valuation will be revisited after their merger with Zash and the launch of Cryptyde.
