Inuvo Update – Buying the Sell-Off

May 22, 2012 at 6:44 am Leave a comment

Last week, Inuvo reported a fairly solid Q1 that included three months of the old Inuvo and one month of the old Vertro’s operating results.  Since that time, Inuvo shares have traded lower on very little volume.  Two months ago, we wrote in an Inuvo update to the GrooveVC community that we would not be surprised to see some weakness in Inuvo shares until the company reports its second quarter results – the first report that will include a full three months of the combined Vertro and Inuvo operations. The last few trading sessions are a great example of exactly what we were talking about, as Inuvo has traded at new 52 week lows on several occasions leading up to Monday’s new multi-year low on very low volume. We believe the sell off is unwarranted, particularly in light of the reported results and comments from management that suggest that the key drivers of Inuvo’s growth (ALOT search and Inuvo’s Partner Programs segment that includes display advertising and Bargain Match) are “on fire” and the third party Publisher Network has stabilized and appears to be well positioned to return to growth in the near future. Additionally, the company is in the very early stages of rolling out two initiatives that could evolve to be significant drivers of revenue growth – the Kowabunga local deals launch this week and the improved local search offering that will be monetized by Google ads and managed in house.  We are also intrigued by the potential for the “mobilization” of the company’s app portfolio that was discussed on last week’s conference call.

We continue to believe that any weakness in Inuvo’s share price is a great opportunity for adding to your position and bringing others into the fold. The brief sell off on very low volume Monday is a great example of this – as some investors were able to pick up shares at prices that should allow for 200%+ gains over the next 12 months. The time to buy and bring others into the fold is now, as we believe the Inuvo story will increasingly attract other investors as the strength and scale of the combined Inuvo/Vertro becomes clearer beginning with the reported results for the current quarter.

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