Avoid Vinco Ventures Until Its Convoluted Finances Make Sense
Vinco Ventures (NASDAQ:BBIG) has apparently closed on the purchase of 80% of Lomotif, a Tik Tok competitor that recently launched in India. However, its holding in the 80% is through a division that in which it has just a 50% interest. In effect, it controls just 40% of Lomotif. So far that acquisition has done nothing for BBIG stock, which has been gyrating wildly.
As a result of this acquisition, and some other extremely convoluted financings, no one really can tell what the value of BBIG stock really is.
Additionally, it seems the best bet for anyone investing or considering investing in BBIG stock is to wait until there is less confusion and difficulty in understanding its finance.
Where Things Stand At Vinco Ventures
For example, it has $149.9 million in cash and restricted cash on its balance sheet as of Sept. 30. But $100 million of that is is kept in a restricted cash account as security against a $120 million convertible debt loan financing. In effect, it does not have access to that cash.
Moreover, so far, the acquisition of Lomotif has not really provided any kind of real upside to Vinco Ventures. That is because its value seems a bit difficult to rationally determine at this point.
For example, Vinco gave a recent slide deck presentation for its present financial position in its recent proxy report on Sept. 3. It also showed that there would be 80.6 million shares outstanding, but that 8.8 million more were to be issued, as a part of the Lomotif acquisition. At least it seemed to imply this.
However, in the company’s recent 10-Q report, the company indicated that there are now 137.083339 million shares outstanding as of Nov. 22, 2021. That is quite a difference.
That implies that its market value, at today’s price (Jan. 28) of $2.86 per share, is $388 million. This is before any warrants that may have been issued during the quarter.
What Lomotif Is Worth
All told, everything surrounding BBIG stock comes down to how profitable Lomotif will turn out to be. There is no financial information about its performance in the latest 10-Q, even though the acquisition seems to have closed. 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.”
“[Lomotif] has grown worldwide as a grassroots social community with dedicated users spanning from Asia to South America to the U.S.”
But no one seems to know how many users there are exactly of Lomotif. Moreover, Note 3 on page 16 of the 10-Q indicates the company paid $92 million in cash for the acquisition (although apparently only maybe half of that came from Vinco Ventures — but even that is not clear).
Moreover, Lomotif apparently had cash burn of $6.691 million and a net loss of $6.747 million during the portion of Q3 that Vinco Ventures owned it. But again we don’t know how long it owned Lomotif during the quarter.
So, without basic numbers such as revenue, app subscribers, cash burn, and even headcount, we can’t put together any kind of rational analysis of the value of Lomotif.
Bottom Line
Maybe Vinco Ventures will get serious with investors with its upcoming quarterly results. At least at that point, it will have owned a 40% see-through stake in Lomotif for a full quarter.
If it provides more transparency and honest data for analysts to be able to value the acquisition, BBIG stock might have a shot.
Until then, the stock is likely to gyrate around until investors can understand its convoluted finances.
On the date of publication, Mark R. Hake did not hold any position (either directly or indirectly) 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 Newsbreak.com and runs the Total Yield Value Guide which you can review here.
