We believe that the company’s still solid balance sheet, valuable Internet property assets, and the low valuation of its shares relative to future business prospects, offer investors solid downside protection, as they wait for the company’s current management team to execute on new strategic corporate initiatives.
Specifically, it appears to us that Autobytel has failed to deliver satisfactory financial returns in the past because the company’s previous executive management teams have focused on building an online lead generation business, and other non-core auto businesses, while the real profitable action in the Internet industry was and will continue to be in the high-margin advertising business.
Our investment thesis is that the company, under the new leadership of several proven Internet executives, is finally beginning to allocate more financial and human resources to establishing a high-growth and high-margin online automotive advertising business. This strategy, if successful, would be highly profitable for the company and its shareholders. A quick look at the valuations currently being afforded to other consumer-driven, advertising-supported website properties, by both venture capitalists and public Internet companies, is quite supportive of our investment case for AutoBytel.
In sum, despite the fact that the company could likely face several more quarters of negative operating results, we think that the stock could move significantly higher over a longer-time frame as online advertising becomes a higher percentage of the revenue mix. As such, we think that investors with a multi-year investment horizon would be wise to begin investigating AutoBytel as a potential investment at this time, especially given the current positive investor sentiment towards consumer Internet properties.
For our full report on Autobytel (ABTL) and our other stock picks, including our target buy and sell prices, please subscribe at www.envoyglobalresearch.com
We own shares in Autobytel. This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.
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