For the last few months I have been warning investors away from Vinco Ventures (NASDAQ:BBIG) stock. Since my first story came out in September, the shares are down 67%. They closed November 23 at $3.13.
My problem with the company is that there is nothing there. It’s all hype and buzzwords like streaming and crypto.
There are people who pump stocks to sell them. I’m dumping this one while never having held it, long or short. But there’s a method to my madness. I want to explain that stocks like this have a purpose.
Animal Spirits Haunt BBIG Stock
The purpose of stocks like Vinco Ventures is measuring what the stock picking pros call “animal spirits.” BBIG stock is haunted by them.
Markets are always balanced between fear and greed. Fear sends prices down while greed sends prices up. When prices are going up, beyond fundamental value, traders will say the markets have “animal spirits.” By looking at stocks off the beaten path, you can measure these animal spirits.
The good news is that, in general, those animal spirits are diminishing. Investors seem focused on real companies like Micron Technology (NASDAQ:MU). Recent efforts to pump up BBIG stock, with rumors of another short squeeze, only got a 5% pop in the stock price.
The Reddit crowd “analyzing” the stock only looks at its chart. They don’t seem interested in the business. For me, that’s a warning sign. Despite repeated efforts to prop up BBIG stock since mid-October, the general trend in the stock is down.
No There, There
With Vinco, we see little to no there, there. What does exist here, as I’ve said before, is former MoviePass chairman Ted Farnsworth. He took a majority position in BBIG back in February, through a company called ZASH Global Media and Entertainment. He’s now in the process of changing the company’s name to ZASH. Next time you see it, ZASH may well be its stock symbol.
What’s in ZASH? There’s an ad outfit called Adrizer, whose name is being changed to ZASH. There’s an NFT marketplace called Cryptyde, which could prove a profitable spin-off, assuming it gets done. Cryptyde says it’s launching a joint venture “focused on the BTC mining ecosystem.” This is an effort to put consumers into bitcoin mining equipment through smart contracts. The release on that scheme calls Vinco “a selective acquisitions company focused on digital media and content technologies.” A search for Vinco Ventures on Google doesn’t lead to a www page, but to investors.vincoventures.com. Are you starting to see a pattern?
Farnsworth’s own web page calls him “a financier, entrepreneur, film producer and consummate disrupter.” His IMDB page lists him as an executive producer on 10 films. I saw the most recent one, “American Traitor,” a courtroom drama featuring Al Pacino chewing scenery as a Jewish defense attorney. It’s a role he did well in the 2020 series “Hunters.” That had a better script.
Calling someone an executive producer can be misleading. Some executive producers are deeply involved in their films. Sometimes it’s just the guy hustling up the money. There are often three or four executive producers on a single project.
The Bottom Line
Ted Farnsworth is a hustler.
I mean no disrespect in that. We need hustlers. They’re essential to capitalism. They provide connections, excitement, and sparkle. They find opportunities, some of which are valuable.
I’ve invested with hustlers, however. It never ends well. You wake up and find your money, and the hustler, have disappeared. All you’ve gotten is the entertainment of watching the hustler at work.
It’s when a company consists of nothing but hustlers that I worry for readers’ money. It’s when hustles get hot in the stock market that I worry about the market.
Watch out for Vinco Ventures, no matter what it’s called.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Dana Blankenhorn has been a financial and technology journalist since 1978. Just in time for the holidays he has a collection of COVID-19 stories at the Amazon Kindle store. Write him at firstname.lastname@example.org or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.