Inuvo: Looking Forward to 2014
The recent surge in Google’s (NASDAQ:GOOG) share price proves that power of internet advertisements is as strong as ever. In 2012, Google generated approximately $32.2 billion from online ads. That is an absolutely astonishing figure, but it shouldn’t come as a surprise to those who understand the power of internet marketing and technology. Although Inuvo (NYSEMKT:INUV) isn’t anywhere close to the size of Google, it is a rapidly growing company that is finding intelligent and creative ways to generate revenue through online advertising. After analyzing the company, it became apparent that the market is not properly valuing the company and as such, the current price level offers an attractive risk/reward opportunity for investors.
Inuvo develops software and analytics technology that is accessible over the internet for use by online advertisers and website publishers. The company’s platforms provide a mechanism for advertisers, publishers and consumers to easily and openly connect, thus facilitating the execution of marketing programs. The company operates primarily through two segments:
- Performance Marketing — The technology and analytics platforms that support online marketing.
- Web Properties — Websites that Inuvo owns and operates and consumer applications that the company has designed, developed, and marketed. There are three reasons why Inuvo appears to represent an attractive risk/reward opportunity at its current price level: strong fundamentals, undervalued relative to peers, and institutional holdings.
For the past couple of years, Inuvo has done an excellent job of executing its long-term vision which has resulted in substantial revenue and net income growth. In 2011, the company generated total revenue of $35.8 million. That revenue jumped to $53.4 million in 2012, a year-over-year increase of almost 50 percent. While the company did end up losing money in both 2011 and 2012, there was a substantial narrowing of the net loss on a year-over-year basis. While that growth is impressive, let’s jump ahead to the numbers presented thus far in 2013 which is more relevant to the current valuation of the company.