Special Situations Investing

The Short Case on INVESTools

I welcome any intelligent debate, although do not appreciate how you begin your criticism with a personal attack, which is considered bad form in any argument. I concur that based on the facts you have laid out, their business model, with a significant amount of recurring revenue and ability to scale, is attractive. Furthermore, ThinkorSwim and Prophet.net enhance this value, which you correctly pointed out.

Still, my main concern is the product itself, as I don't see how helpful this product really is for the company's target audience of retail investors. Until I see some data that shows users outperforming the market, I will remain skeptical. Ultimately, one must ask if the customer is really better off for using INVESTools. In my opinion, the long term viability of INVESTools hinges on this fact.

On the other hand, you have mentioned that as a subscriber, and I would assume as an institutional investor (as you have your MBA and CFA), you appreciate their product as it provides timely financial information for a low cost of $50/month, especially Prophet.net, which is a lot less than Bloomberg and other types of information platforms. If this is the case, then perhaps the company should be focusing on institutional customers, as opposed to marketing their product to retail investors.

I appreciate your detailed commentary, as it was well informed and tells me that at least someone is reading my articles. If my writing invokes debate, all the better. Only through rigorous analysis and questioning of facts can we ultimately arrive at the truth.