- BBIG stock closed up 28% on Friday, a noted outperformer.
- Vinco Ventures stock soaring as the date for Cryptyde spin-off is announced.
- The end-to-end product company shareholders to receive 1 TYDE share for every 10 BBIG shares held.
BBIG stock soared on Friday as retail investors flocked to the name as the date for the long-awaited Cryptyde spin-off was announced. BBIG stock finished up at $3.29 for a near 30% gain on the day. Impressive when we look at the overall health of the stock market. Added to headwinds were bearish themes in the crypto space also.
So is this one worth the wait? We think not, but read on.
Vinco Ventures (BBIG) stock news: High debt and speculation
BBIG announced last week that the spin-off for its Cryptyde subsidiary is nearing. Shareholders in BBIG as of May 18 will receive one share in Cryptytde (TYDE) for every ten shares of BBIG held. Anything else will be settled in cash if not in multiples of ten shares. While stockholders cheered the moe we remain unconvinced. Yes, we can get some impressive short-term spikes, but the investing environment has totally changed in the last six months toward these types of speculative investments.
In our last article, we outlined some of our main concerns which are outlined in the most recent SEC return from Vinco Ventures. There is likely to be a large dilution to existing shareholders, based on agreements made to raise finance. There are also further debt maturities in the two years that will likely struggle to get refinancing or indeed at the very least attract much higher rates. Just take a look at credit spreads and how much they have widened this past year.
$33 million is due for refinancing in July 2022 and another $80 million in July 2023. Elon Musk had quite the time securing money from 12 banks to fund his Twitter takeover, he had to put up a huge amount of Tesla (TSLA) stock as collateral. So how does BBIG compare in funding terms versus Tesla and Elon Musk? You can answer that one yourself. There is also a potential doubling of the share count coming in relation to warrants issued in November and December 2021.
Vinco Ventures (BBIG) stock forecast: Spikes hitting lower highs
So given what I have outlined above, this is not an investible case for BBIG stock. Yes, there may be the occasional spike which we have just witnessed but this is unlikely to see any follow through and will likely see BBIG stock come straight back down. Each of the five spikes identified in the chart below fails at a lower price, a classic downtrend.
BBIG stock chart, daily
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