Auto Dealers Race in Cyberspace but Run Out of Gas

From the “Anything you can do, I can do better” department: Two weeks ago, Irvine-based Autobytel.com Inc. issued a news release saying that dealers in its network sold $1 million worth of cars through its site every hour.

It was a simple number that anyone could have determined with some minor calculations using numbers the company had released a month ago, but Wall Street reacted to the news release by boosting the stock 47%, adding $132 million to the company’s market capitalization in a single day.

Last week, rival Autoweb.com Inc., like an amateur trying to duplicate a trick performed by a magician on stage, issued a similar release, saying its site generated $26 million a day in sales. The result? A paltry 19-cent increase in the shares.

In any case, despite the hype and dueling news releases, both companies’ stocks have resumed the downward slide that began shortly after their initial public offerings, which occurred within days of each other in March.

At the close of trading Friday, both stocks were below the prices at which they went public. Autobytel closed at $17.06, 26% lower than its public offering price of $23. Autoweb, which went public at $14, closed Friday at $13.63.