AI adtech Inuvo confirms 2Q revenue guidance, does reverse stock split; shares soar

Inuvo, an advertising technology and AI company that develops and sells AI-powered solutions for brands and agencies, soared more than 17% yesterday, June 12. It confirmed that its second-quarter revenue will be up at least a quarter versus the previous-year period and completed a reverse stock split. The latter is meant to attract institutional investors, reducing risks for them, while giving Inuvo greater stability.  

Inuvo rose more than 17% on the New York Stock Exchange yesterday to $3.56 per share. In premarket trading this morning, the stock has fallen 10% amid a broad selloff due to rising tensions in the Middle East. 

Yesterday, the company reaffirmed its guidance for second-quarter revenue growth of at least 25% year over year. In April-June 2024, revenue came up in up 9.4% at $18.2 million.

In addition, Inuvo has completed a 1-for-10 reverse stock split. This is a strategic move to increase liquidity and make the stock more attractive to institutional investors, many of which are restricted from purchasing stocks trading below certain thresholds, CEO Richard Howe was quoted as saying in the press release.

Having strategic investors gives businesses access to capital and mitigates volatility, writes market intelligence firm Investor Update. Institutional investors often take the long-term view, whereas retail investors are known to react to short-term market fluctuations. A strong institutional investor base is critical to a company's ability to weather short-term market volatility, adds online incubator Faster Capital. In addition, as Investor Update notes, partnering with institutional investors lends credibility to businesses given their due diligence and rigorous vetting process.

Inuvo is off more than 45% year to date but up almost 37% over the last 12 months.

The company has four ratings from Wall Street analysts, all of whom recommend buying, according to MarketWatch. Their average target price of $14.75 per share implies massive upside of 314% versus the last close.