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Plenty of focus on Vinco Ventures (NASDAQ:BBIG) this week with meme surfers hoping this blockchain play is going to recover the losses it took after it hit an ATH of $12.49. The $679m market cap stock closed out Monday’s trading just under the $7 mark.

Vinco Ventures has been on a bit of a slide since early September, but was seeing some buying activity as we moved into this week. The stock was, however, trading down over 2% in the US market going into Tuesday’s trading session.

Pundits are arguing that Vinco stock will be going higher this week. Meme traders identified a short squeeze on Vinco Ventures, and the company is small enough for the long side action to make an impact. It also looks as if smaller traders appreciate the Vinco story, regardless of who might be stacked up on the short side.

Trading volume is up, at double the usual volume for this stock. Some 80m shares changed hands during Monday’s US trading session.

Another factor underpinning a possible rally is the rise in the Ethereum price again. ETH was trading at 2914 at time of writing.


Vinco Ventures has a lot going for it

Vinco Ventures is not really a dud that has attracted the attention of short sellers, although we are surprised that someone is trying to short the stock in this climate, especially one with such a small free float. It comes as no surprise that Reddit traders have picked up on it.

Vinco Ventures is in the business of making acquisitions in the NFT and blockchain market. In many respects it is similar to Canada-listed Cypherpunk Holdings (CSE:HODL) which has assembled a mixture of digital assets like Bitcoin and stakes in both public and private companies active in the online privacy space.

Vinco Ventures has a JV with ZASH Global Media and Entertainment ( called ZVV Partners) which has acquired an 80% stake in Lomotif. In April it also acquired the assets of Emmersive Entertainment in an all stock deal. It has developed the EVNT platform, which operates the NFT commerce site, E-NFT.com.

There are plans afoot to spin out EVNT into a separate, possibly listed company.

Medical products drive has hampered success

The financials make less brilliant reading, and here we may see the rationale for slapping a short trade in the stock.

For the three months ended June 30, 2021 gross profit decreased by $198,424 as compared to the three months ended June 30, 2020 gross profit, a decrease of 16.97%. The decrease in gross profit is mainly attributed to the decrease in sales of Personal Protective Equipment in the Edison Nation Medical division.

For the three months ended June 30, 2021 gross margin increased to 36.06% as compared to the three months ended June 30, 2020 gross margin of 22.59%. The lower margins in the prior period are due to revenues from the lower margin Edison Nation Medical division.

Medical division? Why does a company that is focused on digital plays and contains internal traffic platforms like Honey Badger and Social Pulse Media, have a medical division, and one that is hitting it in the numbers?

Time to rein in wacky Edison Nation?

Edison Nation announced a merger with Vinco Ventures in November 2020. Edison Ventures is described as “a multi-faceted ecosystem that fosters innovation and drives IP, media and consumer products.” It entered the direct to consumer PPE market via Amazon in September last year, ahead of the merger with Vinco Ventures.

This seems a little off mission for Vinco Ventures, which is more focused on the NFT and blockchain space. There is very little blockchain in Edison’s Purple Mountain Clean Hand Sanitizer or its Shower Lily. It comes as no surprise to see this area of the business creating issues within the financials.

Hopefully the company can now put its last set of financials behind it and focus on core areas like digital media, otherwise it risks confusing investors and cratering its numbers with more half-cooked projects. With some wind in its sails from retail traders going into October, now is the opportunity for Vinco Ventures to shine.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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