Steer Clear of This Social Media Pump

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In 2020, social media influencers became more relevant than analysts on Wall Street. 

Guys like Will Meade and Zack Morris started promoting low-dollar stocks to their followers, and for a while, it seemed like everything they mentioned took off. 

However, 2022 has been a different story. Many of the companies they’ve mentioned got destroyed. 

One of those companies is Vinco Ventures (BBIG), which is still popular, trades more than 24 million shares daily.  

That’s helped it garner the 7th most searches of any stock in the last month by financial pros.

Yet, this is more rubbernecking than actual value research.

Here’s why.

Vinco Ventures’ Business

Vinco Ventures (BBIG) is focused on developing digital media and content technologies. BBIG has a consolidated subsidiary, ZVV Media Partners, LLC, a joint venture of Vinco Ventures and Zash Global Media and Entertainment Corp, which has an 80% ownership interest in Lomotif. Lomotif is a video-sharing social media platform. 

During Q1 2022, the firm completed an acquisition of AdRizer LLC, a provider of technology solutions that uses AI for digital advertising analytics and programmatic media buying. 

In the summer, the company received a written notice from the Nasdaq listing Qualifications Staff indicating that its temporary CEO was no longer independent and the company was no longer in compliance with the Nasdaq Listing Rules because it didn’t have a majority independent board and that the Audit Committee no longer consists of three independent directors.

The stock stopped trading for two weeks and resumed again in August.  

The firm has not released its Q2 2022 due to all its issues, including an attempt at a hostile takeover. 

However, BBIG did release Q1 2022 results, which showed an improvement of 349% in total revenues.

Unfortunately, while revenues increased, its gross profit decreased by 34%, and its gross profit % decreased by 85%. 

Financials

During its most recent quarter, BBIG had gross profits of 5.2%, which is horrendous for a social media company. Companies like Meta, Pinterest, and Snap all have profit margins of 60% or better. 

To make matters worse, BBIG has a negative operating cash flow -of $88.5 million. In addition, it has $67 million in debt while carrying $131 million in cash. BBIG trades at an atrocious -11.4 diluted EPS (ttm). 

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Valuation

BBIG has negative EBITA of -$95.22 million. The company’s revenue per share stands at a tiny 0.22x. Its net income available to common (ttm) is a brutal $-1.02 billion. 

Profitability

BBIG does not make money as a company. The firm has an operating margin (ttm) of -489.93%. Its return on assets (ttm) is terrible at -21%. What’s worse, BBIG has a disgusting -1,173% return on total capital. And the firm burns cash fast. 

Growth

On the bright side, BBIG has grown its revenues by 48.5% YoY. However, its gross profit margin has worsened. 

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Our Opinion 0/10

BBIG has been a favorite among traders on social media and chat rooms. 

Believe it or not, the stock pumped to $8.50, but it has since dropped significantly and appears to be headed to zero. Most likely, the Nasdaq will delist it, and it will find a home on the OTC markets. 

If you like money, you should stay far away from this stock.