Things About Inuvo that Most Investors (Apparently) Don’t Know

December 7, 2012 at 9:01 am Leave a comment

We received multiple notes from community members who have large gains in their INUV holdings and who are tempted to sell some of their Inuvo shares in the current $1.10 – $1.20 range.  And we got notes from some who did sell some of their holdings in the $1.80 – $2 range last week. They ask – Should I sell now?  Should I buy back in? The answer to each is the same. No way you sell at these levels.  Buy, Buy more and tell your friends to buy too.  As of this writing the stock is trading at $1.16.  It is cheap.  There is a reason the stock went up to $2+ on 20x normal volume.  Deep pocketed investors want to own Inuvo stock.  We believe they also saw a chance to bring the price back down to get more shares at cheaper prices, so they are trying to do that.  What do they know that makes them want to own Inuvo stock so badly?  Here are a few educated guesses –

1) Patent #8,321,269 – I am pretty sure most don’t know about this, but it is information that is publicly available and known by investors who comb the USPTO site for new IP gems.  Late last week, Inuvo’s ValidClick was awarded patent #8,321,269 , which appears to be very broad and potentially has big implications for the big search and affiliate companies who are using some of these methods in their affiliate programs.  Interesting to note, Inuvo’s predecessor company originally acquired the patent pending technology in a cash and stock deal in the $30 million range, which is more than the company’s current market cap ($27m). It took over seven years, but the  patent was finally granted and on its face it appears to be very broad, potentially encompassing many aspects of online commerce (search, affilate commerce, etc.) and it appears that most of the larger players in the affiliate space are using methods that appear to be covered by this patent.  The patent was just awarded last week and the company has not done a PR about it yet, so we will probably hear from the company on this next week.  Rumors are already starting to swirl about the different parties that would want to buy the patent, buy Valid Click or even buy the whole company to get the patent.  This should make owning the stock over the next few months even more interesting.

2) Bargain Match App Breakage – the way the new Bargain Match App is going to change the numbers for Inuvo is simply not reflected in the stock price.  Most people who try bargain match like it, keep it and the company earns $10 – $30 over the next 12 months instead of $2 if they just got the Appbar.  Consumers who download it and then quit using it before they earn enough to get that first $20 check, Inuvo gets to keep that money.  Its called breakage.  Inuvo will earn millions from this in the future, though they would rather conumers keep it and keep getting checks, because a check for $20 to a consumer means that Inuvo likely made close to $20 too, from this same customer that it previously hoped to make $1.50 – $2 from. Inuvo is acquiring these users in the normal course of its existing Appbar business and they are paying nothing extra to get them.  Nothing, zero, zilch, nada.   The marketing of this has been going on for a good 8 – 9 weeks now. Its going to provide a nice boost to the Q4 numbers. In 2013, it could make Inuvo into a different company entirely.    

3) New Seeking Alpha Article – also publicly available (now) but not widely known 🙂 is that we are expecting to see a very bullish seeking alpha article published soon that will make a very compelling (if prior articles are any indication) case for Inuvo that explains why the stock could trade up to $5 within the next two years, a neat 4 bagger (homerun) from current levels. Prior results are no indication of future results, but it seemed that the last bullish seeking alpha article on Inuvo was very well received as the stock traded up close to 100% in the days following it. 

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