Disclosures

Autobytel Inc.

I, Sameet Sinha , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.

Disclosure

  • B. Riley & Co., LLC does and seeks to do business with companies covered in its research reports.
  • A portion of this analyst’s compensation is based on the sales, trading and investment banking activities of B. Riley & Co., LLC.
  • B. Riley & Co., LLC makes a market in the securities of the company covered in this report.
  • This company currently is, or within the past 12 months was, a client of B. Riley & Co., LLC. The services provided were Investment Banking Services.
  • B. Riley & Co., LLC, or any of its affiliates, has received compensation for investment banking services from this company in the past 12 months.
Disclosure Chart

Ratings Distribution as of April 27, 2017
Rating Number of Companies Percent of Total Number of Companies with
Investment Banking Relationships
Percent of Total
Buy 161 67.4% 25 10.5%
Neutral 77 32.2% 0 0.0%
Sell 1 0.4% 0 0.0%
Total 239 100% 25 10.5%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect "Buy" rated stocks to materially outperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly attractive.
  • Neutral: We generally believe "Neutral" rated stocks will perform roughly in line with the S&P 500 and Russell 2000 over the intermediate and long term.
  • Sell: We generally expect "Sell" rated stocks to materially underperform both the S&P 500 and Russell 2000 as well as other stocks in their sector. Further, we believe that the potential reward relative to the potential risk is particularly unattractive.

Risks and Considerations

Additional Risks and Considerations

    • Acquisitions – The company could make large acquisitions. The company has been and will continue to make acquisitions in the industry. This could be dilutive and /or complicate the financial structure of the company.
    • Competition - The industry is highly competitive and many of the company's competitors have greater resources.
    • Dilution - As of 2Q11, the company had about 48.7 million diluted shares outstanding. According to the 10-Q, about 10.7 million anti-dilutive shares of common stock have been excluded from the math for dilutive securities. With the acquisition of Auto/Cyber, the company had issued convertible debt, which at $0.93 would be in-the-money and would convert into about 5.5 million shares. Additionally, the company has also issued Warrants for 2 million shares at an exercise price of $0.93 per share.  The Warrant becomes exercisable on the third anniversary of the issuance date (i.e. Sep 2013). For valuation purposes, we have included 7.5 million in the share base, but these have not been included in the GAAP income statement.
    • Economy - Macro-economic issues such as increasing oil and gas prices and a possible drop in consumer spending could have a negative impact on the company's business.
    • General Industry - The company could miss our estimates and/or their financial guidance.
    • Growth Plan - There are many factors that may impact the company's ability to achieve its stated growth objectives, including challenges upon entering the highly competitive performance footwear market.
    • Industry - Auto buying patterns are highly cyclical.  Since autos are a high priced item, price sensitivity can be very high, especially in times of economic turmoil. In such situations, manufacturers and dealers could pull back on their marketing.
    • Industry - Natural disasters have an impact on demand and supply in end market. Since the auto industry is very global in nature, natural disasters tend to impact both demand and supply. For example, when the earthquake in Japan struck in 2011 this prompted some advertisers to pull back on their marketing spend, which impacted the company.
    • Trading volume - The company’s has a small market cap and shares have low trading volume. This significantly reduces the number of investors who can trade this stock and hence reduces the liquidity. Additionally, in times of macro uncertainty and volatile stock markets, these types of stocks tend to lose favor.
    • Turnaround - Turnaround rests on quality of the company’s ads. Our thesis rests significantly on the company’s strategy of improving the quality of its leads. If the quality suffers, we would not see the expected momentum in revenues and margins, which would impact our estimates.
    • See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.