Vertro in a Short Squeeze or is the GrooveVC Theory Catching On?
Today our blog got more visits in two hours between 2:00pm and 4:00 pm eastern than we have had for any total DAY since the first day we went live with the GrooveVC website. Is it a coincidence that the minutes and hours after that saw the stock run up more than 100%? Is the Groove Theory catching on or is it a big short squeeze?
Short Squeeze – Did some opportunistic deep pocketed traders decide to take advantage of a mispriced stock that has no debt, a cash hoard and recent management confirmation that they will be profitable going forward? Our level II analysis showed some pretty heavy intraday short selling over the last couple of weeks – big shorts coming in to beat back all intraday rallies, with what appeared to be well executed short covering in the last 30 minutes. Today’s action was exactly the same, except with about six minutes to go in the trading day, someone caught the shorts red handed and hit them with over a million shares on the buy side. The action in the after hours trading session suggests some pretty intense short covering with the stock trading up another 40% on over a hundred thousand shares traded.
GrooveVC Theory Catching On – Is it more likely that some prudent investors simply recognized what is happening here? We have a company that can truly be MADE BY SHAREHOLDERS who decide to invest and become “engaged“ shareholders – simply use Vertro‘s Google search for all your searching/shopping and take the time to help friends, coworkers and family members get set up (simple set up of a home page or download the toolbar) to do the same. Our experiment to test the productivity of an engaged shareholder suggests that just a few hundred shareholders could have a seven figure impact on Vertro’s bottom line, no small thing for a company with a $10 million market cap (at today’s close the cash adjusted market cap would be just over $12 million). But the bigger picture remains what will happen when others start to see what is happening and join in – with just a few thousand engaged shareholders, you get the potential for EARNINGS that exceed the $10 million level, the recognition that a “Google Network” Nasdaq technology company growing at triple digit rates should receive and the hyper growth earnings multiple ranges where such companies usually trade. This of course leads to higher stock prices, more recognition, likely even more users and the cycle continues……
Vertro was the second biggest gainer on the Nasdaq during the regular session today with a 69% gain and the largest gainer during the after hours session where it tacked on another 30%. Maybe tomorrow we will start to get a little of that recognition.
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