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Today’s Market Will Remain Unkind to BBIG Stock:

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Even those who are bullish on Vinco Ventures (NASDAQ:BBIG) stock have to concede that it’s a bit of a mystery.

vinco ventures (BBIG) logo on an orange/red background

Source: vincoventures.com

The value of its businesses and of the company are riddles that have not yet been fully solved. As a result, it’s been tough to make an informed decision about whether this digital holding company, which is in the process of spinning off its crypto and non-fungible token (NFT) unit, is a buy.

Those who have bought BBIG stock have done so on hope and hype alone. Granted, that worked out very well for traders during 2021 and briefly in early 2022. At the time, with retail investors overly confident,  it didn’t matter that the company had too many red flags to count.

With short interest in the name high and plenty of chatter about it online, it went “to the moon” and back on several occasions. However, the market has changed a great deal since then. With high inflation, rate hikes, and now the Russian-Ukrainian conflict causing skittish investors to sell stocks, unless Vinco’s next financial update is promising, expect BBIG stock to sink further.

Why a Comeback by BBIG Stock Seems Very Unlikely Right Now

The attraction of Vinco Ventures has never really been about its underlying assets. Sure, those buying its shares may have convinced themselves that  Vinco’s NFT segment and/ or its indirect stake in Lomotif, a video-sharing site that’s very similar to TikTok, were attractive.

But investors’ excitement about BBIG stock has been based on the idea that it will rally due to the renewed hype of Vinco.

For much of 2021, the environment was perfect for such a phenomenon to occur. The meme stock army was bidding up heavily-shorted stocks, penny stocks, and many other types of stocks through coordinated buying of them. With many retail traders willing to follow the lead of those hyping stocks, a number of names underwent big short squeezes.

In late August and early September 2021, Vinco became the meme flavor of the month. BBIG stock went up more than four-fold during the period, soaring from $3 to $12.49 . With investors’ sentiment deteriorating later in the year, the shares collapsed back to the low single-digits. Still, in January, Vinco managed to pull off one last short squeeze, spiking above $5 per share, only to fall back once more.

Vinco Has More Room to Fall

After dropping  to around $2.25 per share, BBIG stock may look like a buy today if you assume  that it can undergo a squeeze again. However, there’s little reason to make that assumption, since the meme era seems to have ended.

Granted, that doesn’t by itself mean the “game is over” for Vinco. In theory, the shares could still move higher based on their fundamentals. But unfortunately, I wouldn’t hold my breath waiting for that. While there’s no denying that BBIG stock is inexpensive, it’s tough to make the case that it’s undervalued, at least not until its fundamentals become clearer.

As I’ve noted in previous columns, Vinco’s management tends to reveal important information slowly. Although it’s provided some information about  one of its acquisitions, there are still many unanswered questions about the company. For example,  there are questions about its corporate structure, and Vinco still has not yet completed its planned merger with ZASH Global. Given these points, it’s tough to decipher its financial statements and to figure out Vinco’s underlying value.

Also, the company has not disclosed the dilutive impact of the warrants that it issued last year. And although it’s already early March, we haven’t seen its 10-Q form for the quarter that ended on Dec 31. Nevertheless, while the answers to these questions could provide the market with a better idea of Vinco’s true value, something tells me that the way Vinco is disseminating this information is all you need to know about whether the data will be good for its investors.

The Bottom Line on BBIG Stock

Sometime soon, Vinco will need to release its financial results  for the December quarter. At that time, we’ll have a better idea about whether the stock is a bargain or overvalued.

In the meantime, if the market’s volatility remains high and the move away from “risk-on” stocks continues, BBIG stock could sink further. Meanwhile, it does not have any strong, positive catalysts. In light of these points,  investors should avoid the name for now.

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.

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