I’ll give you 3 hints:
1. This stock is trading at a 52-week high;
2. The company is profitable;
3. The company operates dozens of websites and sells software that powers hundreds more.
Introducing Internet Brands (INET):
You probably know its ticker symbol – INET – from the days when Instinet was a publicly traded company. But now INET stands for Internet Brands, which owns all of these websites:
Automotive
6SpeedOnline.com
AcuraZine.com
ATVConnection.com
AudiForums.com
AudiWorld.com
Autos.com
CarsDirect.com
CivicForums.com
ClubLexus.com
CorvetteForum.com
DodgeForum.com
evolutionM.net
F150Online.com
Ford-Trucks.com
g35Driver.com
HDForums.com
HondaMarketPlace.com
Honda-Tech.com
LS1Tech.com
Maxima.org
MBWorld.org
MustangForums.com
My350Z.com
PassionFord.com
Rennlist.com
RX7club.com
RX8club.com
ScoobyNet.com
SellMyCar.com
ThirdGen.org
WikiCars.org
Yota-Tech.com
Careers
AirlinePilotForums.com
CVTips.com
GrooveJob.com
HospitalJobsOnline.com
iFreelance.com
ModelMayhem.com
NursingJobs.org
PPRuNe.org
WAHM.com
Health
3FatChicks.com
FitDay.com
I-Am-Pregnant.com
Home-Related
ApartmentRatings.com
Craftster.org
DavesGarden.com
DoItYourself.com
Epodunk.com
Gardens.com
OhMyApartment.com
RealEstateABC.com
Splitcoaststampers.com
ThatRentalSite.com
Money and Business
BusinessMart.com
FinWeb.com
CreditorWeb.com
BrokerOutpost.com
Loan.com
Mortgage101.com
SmallBusinessNotes.com
Shopping
AVRev.com
Bargainist.com
BensBargains.net
Boddit.com
Deallocker.com
HighDefDigest.com
HighDefForum.com
OutBlush.com
Steves-digicams.com
UltimateCoupons.com
WirelessForums.org
Travel and Leisure
BBOnline.com
BikeForums.net
BritishExpats.com
CruiseMates.com
CruiseReviews.com
DVDTalk.com
EquineHits.com
FamilyCorner.com
FlyerTalk.com
Horsetopia.com
HuntingNet.com
KidsCamps.com
MySummerCamps.com
PuppyDogWeb.com
RCTech.net
SlowTrav.com
TheHullTruth.com
TheNewPartentsGuide.com
TrekEarth.com
TrekLens.com
TrekNature.com
VacationTimeShareRentals.com
VetInfo.com
WikiTravel.org
World66.com
That’s a serious collection, generating over 55 million unique visitors and over 700 million page views in January 2010, according to the company. More than 97% of traffic is from nonpaid sources. These consumer sites generate a little over 2/3 of INET’s revenues, primarily through cost-per-thousand [CPM], cost-per-lead [CPL], cost-per-action [CPA], and cost-per-click [CPC] advertising. Internet Brands just might be the world’s most successful affiliate marketer.
INET’s remaining revenues come from selling vBulletin software, the leading solution for web-hosted forums, and AutoData, a series of solutions for automobile dealers.
Between these operations, Internet Brands made $.28 per share ($.27 fully diluted) on just under $100M in revenues.
A few problems
I’m long INET, but there are a few things that give me pause.
- Revenues dropped year-over-year. That’s not a good trend, especially because the company bought a number of web properties last year. It looks like the consumer automotive sites were the culprit, with CPA and CPL payments from auto dealers down over $13M year-over-year. Not surprising given the environment.
- Dual shareholder classes adversely affect public shareholders. Idealab’s Class B shares control over 60% of the vote.
- There is an overhang of locked up shares that will be eligible for resale in the coming months.
Bottom line
Though not an overwhelming value, Internet Brands has a lot of promise and appears to be executing well. It’s scale is unique among aggregators of small content sites, and should help it attract larger advertisers and improve search engine optimization. As long as Internet Brands’ stock keeps chugging along, it will have a place in my portfolio.
DISCLOSURE: Long INET.
