Vinco Ventures Could Be a Blockbuster, But It Needs More Clarity

·4 min read

Vinco Ventures (NASDAQ:BBIG) is going to change its name to Zash, according to a recent press release on Oct. 20. This follows a recent change in management and a new board of directors — from the old stodgy players to the new management of Zash. Hopefully, that will mean more clarity in terms of the company’s financials. That’s likely what BBIG stock needs to get back to its former heights.

photo of Lomotif app download page on a smartphone
photo of Lomotif app download page on a smartphone

Source: shutterstock.com/Postmodern Studio

Right now, BBIG stock is down from $10.82 on Sept. 9 to $4.69 as of the close of Oct. 27. And that was after a rollercoaster ride, when this stock hit a trough close of $2.19 back on Aug. 19. Its price today, however, is close to a new recent low.

Moving forward, I suspect investors will want to see how much cash the company has now — and what its plans are for the future.

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BBIG Stock: Where Things Stand

This name change comes after a series of acquisitions, including the purchase of 80% of TikTok competitor Lomotif by a division that is 50% owned by Vinco Ventures. This is based on a recent slide deck presentation that the company gave for its present financial position in its recent proxy report.

The slide deck shows that Vinco had $127 million in cash as of Sept. 3 as well as $120 million in debt. It also showed that there were 80.6 million shares outstanding, but that 8.8 million more were to be issued.

That brings the total to over 89.4 million shares. So, at the Oct. 27 price of $4.69, the pro forma market capitalization is $419.3 million.

That means that, after subtracting the net cash of $7 million, the remaining part of the company is worth $412.3 million (i.e., $419.3 – $7 million). However, a second page of the slide deck indicates that if a large number of warrants are exercised, there could be considerably more cash on its balance sheet.

The problem? The warrants have a $9 strike price and the stock is now no longer anywhere near that price.

So, based on the information we have so far, it is almost impossible to value soon-to-be Zash and BBIG stock — much less to say whether it’s worth this much money.

What Lomotif Is Worth

All told, everything surrounding BBIG stock seems to boil down to how profitable the Lomotif acquisition will turn out to be. Right now, there is virtually no financial information about its performance. What we d0 know is the following statement (which the company often repeats):

“Lomotif is one of the fastest growing video-sharing social networking platforms in its category over the last three years, with 225+ million installations of the Lomotif app globally in over 200 countries in 300+ languages.”

The company also claims that over 300 million videos are watched on the platform per month.

On Jul 23, one report in Benzinga claimed that “a third party valuation shows the value of the combined ZASH and Lomotif units at $5 billion based on SensorTower data.” Moreover, the report said that Lomotif had signed content deals with Facebook (NASDAQ:FB) and Instagram as well as Snap (NYSE:SNAP).

But again, this gives us no clue about its financial performance, including revenue and profits. Moreover, as I pointed out above, it is not even clear how much cash there is above the $127 million as of Sept. 3. It is also not clear whether any of the warrants have been exercised, providing more cash to the company.

What to Do with BBIG Stock

Investors could potentially be missing out on some upside if Lomotif does indeed prove to be worth $5 billion. Vinco Venture’s 50% portion of that would be worth $2.5 billion. But without a rational basis to make a decision, investors should probably stay put.

Only the most speculative of investors — especially those who can stand to take a large hit to their position — should gamble on BBIG stock. For most people, though, the best course would be to wait for the financial reports and related press releases. At that point, there may be enough information to properly value the company and its stock.

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On the date of publication, Mark Hake 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.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.

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