GrooveVC Comment On Vertro Stock Price
We have received numerous inquiries from our Groove community members related to Wednesday’s decline of over 15% in the trading price of Vertro stock. We are not aware of any company specific information that would have such an impact on Vertro’s shares and we are not aware of any information that would suggest a material change in Vertro’s business that is negative. We believe it is likely that the marketplace is reacting to analyst downgrades of several other small cap companies in the search/advertising space (LOCM, VCLK) who reported good earnings Tuesday after the close, but gave fourth quarter guidance that was below investor’s or analyst’s expectations.
In our September 9th report, we reminded Groove community members – “Do not be discouraged with the volatility, we fully expect the shares to trade in a fairly wide range until the company reports its first profitable quarter, which we expect to be Q4”. This kind of volatility is to be expected with a microcap technology stock trading below $1. Wednesday’s selloff in Vertro shares leaves the company’s cash adjusted market cap somewhere in the $5 – $8 million range. While we fully expect to see continued volatility in the shares, we feel that any continued weakness that allows purchases in the current price range represents an excellent opportunity to buy the stock at a valuation that does not come close to reflecting the value of Vertro’s assets in an acquisition scenario, the likelihood that the company will report positive EBITDA in Q4, the impact that Groove member’s usage of the Alot products can have on Vertro’s fourth quarter, nor the potential for the company to earn over $3 million in FY2010. Vertro shares in this price range are cheap by just about any measure and this is a great opportunity for us to get more friends, family and business contacts into the Groove at a price that should allow them to see good appreciation early in their Groove community participation. Members enjoying strong stock gains will be more likely to recruit others and more likely to use the Alot toolbar, Home Page and/or desktop search for all of their searching/shopping online. Keep searching/shopping and spreading the word.
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