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RECAP OF LAST WEEK AND RESULTS:
Went down a bit from last week and rests at $2.22. The company recently resolved part of the cash crunch dilemma that was spoken about. They laid off 374 employees (56% of their workforce) shutting down a cash burning laboratory and stopped the service of their diagnostics equipment. This company now has a longer runway and is searching for non-dilutive methods such as partnerships to help pay for the development of their Precludia and DDS. All of their therapeutics aim to address 300 billion in market opportunity, they likely could capture 3%, which would be 10 billion in annual revenue. We are predicting $7 a share in a few months on any partnership news. Insider purchases have been extremely high in the past 12 months.
IN THIS ISSUE
Potential short squeeze stock and also has potential to run to $10 a share from the analysis down below. They acquire companies and are completing a merger with an NFT based company on or before June 24th.
We go over the surface of what VET and MATIC are which have become popular alternatives to bitcoin.
Vinco Ventures : BBIG
Vinco ventures is a company that makes acquisitions. First acquired a company called Edison Nation in November of 2020. Edison Nation is the majority of Vinco Ventures. Edison Nation creates revenue from taking invention ideas and reviewing them to see if they are worth taking to market. They make a revenue off of the invention submissions and also have seen 225 million of total revenue from the product ideas that they have taken to market since they have been around in 2017. This portion of the business has been a cash positive company.
BBIG is relatively small, only 17 employees, but have been able to maintain cash on hand as of their last Q1 earnings report. Their cash burn increased from 65 million this past quarter from only 3.3 Million. The reason behind this is the warrant liabilities that they had to pay out and also upcoming operating costs associated with a planned merger. They have stated that they believe they are able to stay afloat for the next 12 months with their current run rate (No dilution in the near term). They have doubled their revenue from last year of 25 million to 45 million which shows that they are growing rapidly.
They have a merger with Zash coming up which runs social media platforms and works with TikTok and other large social media disruptors to advertise products and digital content.
Big components to helping value BBIG are the incentives for Zash. I have summarized them in quick bullet points below:
Milestone 1 for Zash: If they develop the minimally viable product for NFT tech and validate the Zash platform for attraction of users and customers & If they get a minimum of 10 celebrities on the platform before December 31st 2021. Vinco will issue 1 Million shares to the Zash subsidiary. (This is essentially giving the management team and employees incentive to perform)
Milestone 2: If Zash generates 7 Million or more in revenue by March 31st 2022, they will issue another 1 Milllion shares to the Zash subsidiary.
Milestone 3: If by December 31st, 2023 Zash generates $28 Million in revenue, they will give another million shares to Zash.
Milestone 4: If Zash is able to substantially generate over $62 million of revenue by Dec 31st 2023. They will give another 1 million shares.
If Milestone 4 is completed by Zash, we should see this stock trading over $20-40 a share as this means they could grow even more. Potentially into a billion dollar market cap. These terms will go into effect on or before June 24th.
The reasons why BBIG is likely to surge:
They are entering into the NFT space which is a way to maintain control of the original copy of digital material. This can be anything such as 3d models, art, tweets and much more. This does not stop it from being distributed, however in the future (far future) we could see regulatory changes to make this a legitimate form of tracking digital goods. We think the right to intellectual property is very important as it allows artists, inventors, software developers, architects and engineers to own their property before it is copy and pasted. We think regulation could help with distribution as a buyer/holder of the art would have to maintain a physical derivative of the NFT. This space is developing and what we believe is a very useful adaptation of block chain technology.
They announced a partnership with Tory Lanez who is a canadian rapper that has been growing and recently did a hit piece with Chris Brown. Tory Lanez’s next album will be dropped as an NFT. This will increase the ability to remain in control of his property in the upcoming future. This celebrity does have some allegations and criminal charges against him which could ding his popularity. Thank you to the reddit user: u/MissMyParents for bringing this perspective to my attention.
The company they are acquiring on or before June 24th is Zash which works with NFTs and social media. We think this is a great fit because the acquired company (Edison Nation) has utilized ecommerce and marketing very successfully. Also they have a subsidiary called Honey Badger which has specified in marketing. They will be able to leverage this and generate efficient revenue off of interested consumers. We think they can leverage NFTs into the market place since they are acquiring Zash which is also in the NFT space that allows influencers and content creators to post their content on their site as NFTs.
With a market capitalization that is so small ($93 Million), this company could potentially see wild swings in price as they are becoming more popular and into the block chain space.
Lastly, another idea brought up by a hedge fund manager which has been widely spread recently is the call to put ratio on BBIG for June 18th.
Essentially if the price of the stock goes above and $5 a share, market makers will be forced to close some of the short positions which means buying back shares of BBIG. If this happens before June 18th, it should squeeze upwards.
We think in the short term this will increase over $8 a share and then has a high probability of crashing down to the $3s. Long term, if the company is able to utilize the NFT space and become a large social media giant, we should see the price of this company move up. Artists and developers are slowly shifting to these types of social media platforms to receive proper rights to their content and work.
One Week: $8 due to the possible NFT hype and possible squeeze. With the roll over of profits from AMC and GME, this is a real probability.
One Month: $6
One Year: $6.50-$20
We think that this company will be extremely volatile. They plan to partner with 10 celebrities to bolster awareness and also to generate revenue from NFTs.
Final Thoughts on BBIG:
This company is a good hold in the short term. It will experience volatility as the Zash merger commences and the company undergoes strategic launches with their new social media partners.
This stock is a short term buy in our opinion. Value investing is not fundamental here, it is more so the amount of attention it is bringing. This is a highly speculative stock.
Disclosure: At the time of writing, we hold no positions in BBIG.
We wanted to cover a couple of Cryptocurrency just to outline the use of them. Vechain(VET) is one that has caught our attention. Now this is one of the most difficult ones to buy unless you have access to the Biance US platform. There are a few other ways to acquire it but Biance is by far the easiest route. This Crypto sits at $0.12 right now and has yet to be added to many of the other large crypto exchanges. It could see a huge gain in value once added to Coinbase, Kraken, Gemini, etc.
What does it do?
“VeChain is a cryptocurrency and smart contracts platform focused on supply chain management. It allows manufacturers to add sensors, such as RFID tags, to their products that can then record data onto the VeChain blockchain.” We like to break it down even simpler just to grasp the concept. Basically this blockchain gives companies the ability to track an item. “The way it does that is simple: give each product a unique identity, then use sensors to track what happens at each stage of the supply chain. That way, companies can be sure products are handled correctly, and consumers can verify their purchases are legitimate.” This could be absolutely massive for companies to be able to provide a full history of that product to the consumer.
Polygon is the other Crypto that has caught our attention. “Polygon (MATIC) is an Ethereum token that powers the Polygon Network, a scaling solution for Ethereum. Polygon aims to provide faster and cheaper transactions on Ethereum using Layer 2 sidechains, which are blockchains that run alongside the Ethereum main chain.” One of Ethereum’s biggest flaws is its scalability and Polygon looks to directly solve that. The current price of this Crypto is $1.54 and has gone up almost 6,000% in the last year. Mark Cuban has recently invested in MATIC, he said “”I was a Polygon user and find myself using it more and more," Cuban said in an email. We aren't sure how large of an investment this was but it shows the usefulness Polygon offers.
What does it do?
“Through Polygon, developers can launch preset blockchain networks with attributes tailored to their needs. These can be further customized with a growing range of modules, which allow developers to create sovereign blockchains with more specific functionality”. It allows for more freedom and it offers a lot of security. It works directly with ethereum as well which makes it easy to use. We expect Polygon to continue to grow along with ETH.
The cryptomarket has rebounded somewhat since its last large dip however has yet to really show if it is going to move into a full bear market or a bull market. We recommend watching closely over the next few weeks before getting in. There is a chance that negative news could shoot the price down drastically. If you are already in crypto position, we would recommend holding on to them if you picked good ones to get in they will be fine. Something we did want to point out is DOGECOIN being added to Coinbase. This could cause the price to increase on good news or Elon Musk announcing anything that pertains to the most successful meme currency.
All stocks talked about we have invested in, and do not intend to give advice nor recommend acting upon the information.
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Until next week,
and the Optifinancial Team
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