Million-Dollar Claim Revs Up Autobytel Stock
What a difference a news release makes.
On a day when stocks in general and Internet commerce stocks in particular took a bath, Irvine-based Autobytel.com Inc. saw its shares soar 47% Thursday after it said that purchase requests through its online network now result in $1 million in car sales each hour.
While the company’s news release moved the stock, the number was a repackaging of old figures rather than actual news.
In financial statements filed two weeks ago with the Securities and Exchange Commission, the company said that the Autobytel network handled 489,000 purchase requests in the first quarter of this year, which ended March 31.
If one in five of those requests resulted in an actual sale, and the vehicle price was near the national average of $24,000--estimates that company executives said were reasonable--Autobytel probably hit the $24-million-a-day sales figure at least two months ago.
Still, the news release revived a moribund stock that has fallen steadily since Autobytel went public in March. The day before the news release was issued, the company’s stock touched an all-time low of $14.13, 38% below the $23 price at which the company went public, and 75% beneath its all-time high of $58.
“Autobytel’s stock has shown a lot of weakness because of fear of new competitive threats,” said Udita Malhoutra, an analyst with Midtown Research Group. “Then this press release came out, a little late, I think, saying that they’re the leading site. And on the Web, it’s all about being big.”
Other online vehicle sales firms had recently drawn considerable attention away from Autobytel, particularly CarsDirect.com, a Sherman Oaks company that claims it’s the first to sell cars directly via the Internet. The company is backed by the likes of Idealab founder Bill Gross, Goldman Sachs and MSD Capital, a private investment firm led by Dell Computer Corp. founder Michael Dell.
Earlier this week, AutoNation Inc., the country’s largest auto retailer, said it was considering issuing a tracking stock for its Internet business.
Autobytel officials said its sales figure was calculated for a marketing purpose separate from the news release and that the company’s falling stock price was “not the driver” in the timing of the statement.
“We have a very solid business model and it’s our responsibility to get that communicated,” said Ann Delligatta, the company’s chief operating officer.
Autobytel had not previously made a policy of breaking out the sales figure, but Delligatta said company officials might consider doing so in the future.
The company does not receive any revenue directly from the amount of sales that go through its network. Rather, auto dealers pay Autobytel a fee to be a part of the network and get leads on car buyers. By publicizing the volume of business related to the site, Autobytel hopes to attract more dealers to be part of the network.
The company’s stock was the stock market’s eighth-largest gainer Thursday, going from $15.75 to as high as $26 before closing at $23.13, for an increase of 47%.
About 7.7 million shares traded hands. Since only 4.5 million shares are in public hands, many of them were bought and sold at least twice during the day.
Autobytel’s announcement also appeared to lift the stock of rival Autoweb.com, which also had been in free fall since going public in March. Autoweb’s stock closed at $16.19, up $2.13, or 15%.
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Back in the Driver’s Seat
Since Autobytel.com went public in late March, its stock has steadily declined as attention has turned to competing online vehicle sales firms, including CarsDirect.com and AutoNation. But Thursday the company said $1 million in vehicle sales were generated through its network each hour, boosting the company’s stock. Daily closes:
Thursday: $23.12
Source: Bridge Information Systems
