We recently started a series called “Penny Stock of the Day”. These ideas are geared for traders with an extremely high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: Vinco Ventures Inc. (NASDAQ: BBIG)
Today’s penny stock pick is the consumer products and digital marketing company, Vinco Ventures Inc. (NASDAQ: BBIG).
Vinco Ventures Inc. operates as a consumer product research and development, manufacturing, sales, and fulfillment company in North America, the Asia Pacific, and Europe. It offers toys, plush, homewares, and electronics to retailers, distributors, and manufacturers through e-commerce channels; and personal protective equipment to governmental agencies, hospitals, and distributors.
BBIG operates 13 consumer and digital marketing brands, including 911 Help Now, SRM Idea Lab, and Ferguson Containers. The company operates through the following tools: Honey Badger Media and Pop Nation.
Website: https://investors.vincoventures.com
Latest 10-k report: https://sec.report/Document/0001493152-21-008880/
Analyst Consensus: Not Covered By Analysts.
Potential Catalysts / Reasons for the Hype:
- Vinco is planning to merge with ZASH Global.
- The company completed the acquisition of an 80% interest in Lomotif, one of the fastest growing video-sharing social networking platforms in its category. Lomotif is similar to TikTok and based in Singapore with operations in India.
- The company is acquiring digital advertising service AdRizer.
- BBIG is spinning off Cryptyde. Cryptyde is its cryptocurrency and non-fungible token (NFT) unit.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock has been forming a falling wedge pattern for the past several months. These are marked as purple color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out from the falling wedge pattern. Once the stock breaks out of the falling wedge pattern, it could move higher.
BBIG – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line is above the -DI line, and the ADX line is currently moving higher from below the +DI and -DI lines.
#3 Price above MA: The stock is currently above its 50-day SMA, indicating that the bulls have currently gained control.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line, and has also moved higher from oversold levels, indicating possible bullishness.
#5 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#6 Above Support Area: The weekly chart shows that the stock is currently trading above a support area, which is marked as a pink color dotted line. This is a possible bullish indication.
BBIG – Weekly Chart
#7 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart as well, indicating possible bullishness.
#8 Bullish RSI: In the weekly chart, the RSI is nearing 50 and moving higher. This indicates a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for BBIG is above the price of $3.80.
Target Prices: Our first target is $5.00. If it closes above that level, the second target price is $6.30.
Stop Loss: To limit risk, place a stop loss below $3.00. Note that the stop loss is on a closing basis.
Our target potential upside is 32% to 66%.
For a risk of $0.80, our first target reward is $1.20, and the second target reward is $2.50. This is a nearly 1:2 and 1:3 risk-reward trade.
In other words, this trade offers 2x to 3x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses. For the year ended December 31, 2020, BBIG’s operations lost $7,902,347. At December 31, 2020, the company had total current liabilities of $11,285,663 resulting in negative working capital of $5,943,480.
BBIG – Consolidated Statements of Operations
- The company has a history of name changes. It was formerly known as Edison Nation, Inc. and changed its name to Vinco Ventures, Inc. in November 2020. Before that, the company was known as Xspand Products Lab.
- Despite being a loss-making company, the company executives are being paid significant compensation.
BBIG – Executive Compensation
- The company has ongoing legal proceedings.
- Oceanside Traders, LLC v. Cloud b, Inc. and Vinco Ventures, Inc. f/k/a Edison Nation, Inc.: On April 14, 2020, Oceanside Traders, LLC filed a complaint against Cloud B, Inc. and Vinco Ventures, Inc. with the Superior Court of Ocean County, State of New Jersey, alleging breach of contract and other claims.
- Rosenberg Fortuna & Laitman, LLP and Mark Principe v. Safe TV, LLC: On March 13, 2019, Rosenberg Fortuna & Laitman, LLP and Mark Principe filed a complaint against Safe TV Shop, LLC with the Supreme Court of the State of New York, County of Nassau alleging a breach of indemnification arising out of the use of a certain packaging material.
- Gerald Whitt, et al. v. Vinco Ventures, CBAV1, LLC, et al. : On October 27, 2020, Gerald Whitt, et al, the minority shareholders of Cloud b Inc. (“Whitt Plaintiffs”) filed a civil complaint in the Superior Court of the State of California against Vinco Ventures, Inc., CBAV1, LLC and other parties, alleging fraudulent concealment, breach of fiduciary duty, breach of contract, breach of confidence, intentional misrepresentation, negligent misrepresentation, unfair business practices and civil conspiracy.
- Vinco had to dilute its shareholders with another equity and bond offering to fund the upcoming
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Happy Trading!
— Trades of the Day Research Team
READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.
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