Go big or go home.
That's almost the model of Vinco Ventures Inc. (BBIG) . To be more precise, it's Be BIG. Buy. Innovate. Grow.
Vinco is making a big splash in the non-fungible token (NFT) and social media arenas with its latest ventures. The company recently announced a launch into the NFT space with a twist. The approach is to use a cutting-edge, three-dimensional full-scale NFT to create an immersive experience that brings actors, actresses, athletes and musicians directly into your living room via virtual and augmented reality.
Management has labeled these products E-NFTs (Emmersive NFTs) and Vinco already has pre-sold its first three-celebrity set for $2 million. It soon will be releasing an NFT album from Tory Lanez via the Emmersive platform.
This simply builds on the momentum Vinco has created in 2021. Its merger with ZASH Global Media and Entertainment should be official in the next week, with an additional acquisition via a joint venture coming of an 80% controlling stake in Lomotif, a Singapore video-sharing social network platform that some view as a competitor to TikTok.
That may be a small stretch seeing the recent $34 billion annual revenue that TikTok's parent Bytedance just posted, but the Lomotif platform is plenty sticky. Core users are averaging 90-plus minutes of engagement with more than 300 million videos watched per month. The platform currently caters to Asia, Europe and South America with more than 740 million videos posted since launch and a community that has grown by more than 400% in past three years.
Having the innovators behind Triller, Music.ly and TikTok running ZASH doesn't hurt, either.
These two recent purchases fall into Vinco's roll-up strategy with a focus on digital commerce and consumer brands. Thus far, prior to ZASH and E-NFTs, targets fell mainly on the consumer brands side with a little on the digital front.
In terms of what they are looking to buy, Vinco management seeks targets that fall into one of three tiers:
--Tier 1 includes companies that generate more than $20 million in revenue, are cash flow positive, fully operational, have a strong management team that will remain with the company, and hold intellectual property (IP) assets.
--Tier 2 targets are brand acquisitions that generate revenue of $10 million to $19 million, have positive cash flow, are operational and have IP assets.
--Tier 3 assets are brand acquisitions that generate less than $9 million in revenue, are cash flow neutral, hold IP assets, offer scalability, and are synergistic with an existing holding.
Although Vinco grabbed my attention for its recent moves in the NFT, entertainment and app space, it has a diverse portfolio - albeit small - of revenue-generating companies. Among them:
--911 Help Now offers a battery powered device that provides a direct connection to 911 with the push of a button. The brand sales are projected to reach $7.1 million in 2021, while licensing revenue should hit $2.8 million for a total of $9.9 million.
--HMNRTH provides broad spectrum, full spectrum and CBD isolate products for the consumer. Management's revenue guidance for 2021 aims for $3.8 million.
--4Keeps Roses offers rosebud decor that won't wilt. This smaller holding should garner around $1.6 million in revenue.
--Purple Mountain Clean and Global Clean Solutions provide hand sanitizer and personal protective equipment (PPE). Sales are projected to hit $8.2 million and could continue to benefit from COVID and COVID-related approaches to cleanliness.
--Royalty streams (multiple companies); through strategic partners, BBIG uses non-core brands and IP functionality with zero additional costs to the company to generate royalty streams that will total an estimated $1.1 million for 2021.
Overall, Vinco expects $21.8 million in sales from current brands. In addition, it projects another $16.3 million in revenue from its media/technology and business-to-business sales businesses. That includes Honey Badger Media, Edison B-to-B sales and 911 Help Now licenses.
In its most recent quarter, Vinco announced revenue increased 31% to $2.57 million. Its net loss looks eye-popping large, but after adjusting for a big non-cash charge for issuance of warrants, adjusted EBITDA was only $1.1 million. The company does have $6.5 million of cash and short-term investments on the balance sheet as well. And none of this takes into account how well ZASH or its unique NFTs could perform.
While Vinco falls on the speculative side, I continue to gather a portfolio of small companies creating innovation in the NFT space but hold other areas of revenue generation. CurrencyWorks (CWRK) was the first. I'm adding Vinco Ventures to the group. I don't know if it will reach billion-dollar baby status, but I'm adding it to my group of top picks, which are focused on small, speculative plays that are high risk but offer much higher rewards.