After Friday’s gap-up the market was buzzing with the potential for a short squeeze on Vinco Ventures, Inc. (NASDAQ: BBIG) stock on Monday. The stock hit the ground running, peaking at market open with $9.52. The stock had already seen a runup of 211% on the 27th, and many investors were disappointed with Monday’s volatility. Despite a promising open, BBIG stock dipped to $6.67 before closing at $7.60. Now many are wondering if the squeeze is over or if FOMO will drive the stock into another runup.
BIGG Stock Catalysts
Some hodl investors are hypothesizing that yesterday’s dip was caused by investors who caught wind of BBIG on Friday and got out on Monday. These investors likely missed out on BBIG’s major catalyst – a proxy structure that is supposed to be released in the next few days. In January, Vinco announced a reverse triangular merger with Zash to form a joint venture between BBIG and ZASH known as ZVV. Ted Farnsworth – ZASH Global Media co-founder and chairman – mentioned in an August 30th interview that they would be putting out the proxy over the next “literally several days” and believed that Vinco and Zash shareholders would be “incredibly happy” with the structure.
Meanwhile, BBIG set the ball in motion on July 23rd announcing the closing of its Lomotif Private Limited acquisition. BBIG specializes in acquisitions and leveraging its acquired brands’ growth through their internal engines’ ability to capture the highest conversion traffic. Therefore, Lomotif, which offers a short form video platform, is expected to be the “crown jewel” of BBIG’s media and entertainment company in conjunction with ZASH and Vinco Ventures. Now owned by the joint venture entity ZVV Media – a subsidiary of Vinco Ventures Inc – Lomotif is one of the fastest growing video-sharing social networking platforms. Valued at $5 billion, the platform has established itself globally with more than 300 million videos viewed per month in over 300 languages. Because of this presence, Snapchat chose Lomotif to become a partner for bi-directional integration which will facilitate the posting of stories between both platforms. In light of Lomotif’s high valuation, BBIG stock won’t remain at a market capitalization of 320 million and bullish investors are predicting a price target near $20 based on the merger alone.
Shareholders are also holding out for the spinoff of its subsidiary EVNT Platform, LLC. dba Emmersive Entertainment. Said to be on the verge of disrupting the NFT market, EVNT aims to market E-NFTs, described as “cutting edge 3-dimensional full-scale NFTs” with original artwork featuring famous musicians, athletes, actors, actresses, and performers. Using augmented and virtual reality, these E-NFTs could be used in a variety of ways to produce the “future of memorabilia”. Similarly, this technology will be available for advertising and marketing purposes. During Q3 of 2021, BBIG plans to spinoff EVNT to its shareholders as a standalone public company creating and marketing NFTs .
According to Farnsworth, the company is not looking to raise funds at this time with roughly 80 million “in the bank” after an initial investment of $200 million – half of which went to the Lomotif acquisition. Farnsworth continued to say they had no intention of exercising the warrants worth roughly $170-180 million which means dilution is unlikely to occur.
Given BBIG’s popularity on Reddit, the short squeeze potential is tangible. Since Monday, reports that Fidelity has no shares available to borrow have added to the stock’s momentum especially since these shorts have yet to be covered. However, the number of short shares available is now estimated around 75 thousand. The cost-to-borrow 62% with roughly 28.2% of the float shorted. BBIG’s current volume of 330 million is showing incredible interest considering that it is 15 times greater than its average volume, possibly signaling a moveup for the stock.
Considering the nature of this play, investors are paying attention to media sentiment more than usual. That’s why the opinions of FinTwit’s movers and shakers like @The_RockTrading and @PJ_Matlock are important to keep in mind before investing.
Since the 27th, BBIG stock has been considerably overbought, hitting 88 on Friday and Monday morning. Yesterday’s correction was inevitable and now the RSI has settled near 52 with accumulation following a similar trend. Yesterday, the MACD had a bearish crossover in the afternoon and proceeded to slope sharply. The indicator is still on the upside but is clearly trending downwards. At the moment, the stock is showing positive pre-market movement.
Bullish investors are pointing to the company’s host of catalysts timed to play out in the coming weeks, the FOMO which may drive momentum, and the stock’s online popularity as potential for a gamma squeeze like that on Friday. There are still many shorts to be pushed out considering its public float of roughly 47.2 million.
Should you Buy?
If BBIG stock gains from yesterday hold and $6.90-$7.00 forms the new floor, then a price target of $10-15 is not unrealistic. However, most of the action required for a gamma squeeze was seen on Friday when investors were exercising their warrants. Betting on a short squeeze at this point would take a concerted effort from investors and it is unclear if there is enough momentum to keep investors holding and buying the dip in the meantime. Yet the upcoming proxy news may be enough to drive BBIG stock into a runup making it worthwhile to keep an eye on the stock. Long-term investors may see a return on their investment as BBIG fulfills its acquisitions and develops Lomotif along with its entertainment sector plans. Additionally the spinoff of EVNT will provide another opportunity for investors.
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