AEYE · AudioEye
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $16.52
Note written ·
Price against the kill line
18.5% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $16.52, on record since 11 November 2026. The shares are up 63.1% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $16.52, over the $14.68 intraday high of 30 October 2026, which would show the shares leading the S&P 500. A fourth-quarter revenue result above the $11.6 million top of guidance would also show that.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 26 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 11.0
- Revenue, change on a year (%)
- +7.2
- Gross margin (%)
- 82.9
- Operating margin (%)
- 11.4
- Free cash flow, four quarters ($M)
- 6.5
- Net cash, cash less debt ($M)
- −6.9
- Enterprise value to sales (×)
- 4.2
- Free-cash-flow yield (%)
- 3.8
All filed numbers
What AudioEye reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 11.0 | +7.2 | 82.9 | 11.4 |
| first filed | 10.7 | +8.7 | 78.8 | −5.6 |
| first filed | 10.6 | +8.4 | 78.2 | −17.8 |
| first filed | 10.5 | +7.9 | 78.9 | −7.8 |
| first filed | 10.2 | +14.6 | 77.4 | −3.1 |
| first filed | 9.9 | +16.4 | 77.3 | 2.5 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: −3.0 | 1.0 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +4.5 |
| Operating cash flow ($M) | 6.6 |
| Capital spending ($M) | 0.1 |
| Free cash flow ($M) | 6.5 |
| Cash and short-term investments ($M) | 9.3 |
| Debt ($M) long-term debt | 16.2 |
| Net cash, cash less debt ($M) | −6.9 |
| Deferred revenue ($M) +12.9% on a year | 8.4 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 5.8 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 5.1 |
| Market value ($M) | 171 |
| Enterprise value, market value plus net debt ($M) | 178 |
| Enterprise value to sales (×) | 4.2 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 33.7 |
| Free-cash-flow yield (%) | 3.8 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 2.1% of shares outstanding sold short, 5.3 days of average trading to cover, +0.5% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $128K | $2.7M |
| 12 monthsfrom | $538K | $2.7M |
The thesis
AudioEye's shares are more likely to lag the S&P 500 than lead it over the next three months. The company is now profitable, but revenue grew 7% in the third quarter, its executive chairman kept selling stock after the post-earnings surge, and the shares have already risen 137.0% in three months; the fourth-quarter report, due around March 2027, settles whether earnings keep climbing.
The shares closed at $13.77 on 11 November 2026, against $5.81 on 13 August 2026. The consensus target of $14.62 from six analysts (four Buy, one Hold, one Sell; The Cerbat Gem, 5 November 2026) sits close to that price. The market has therefore already paid for the margin step-up reported on 26 October 2026.
David Moradi, executive chairman, chief product officer, director and 10% owner, reported two sets of open-market sales through Sero Capital LLC. The first was 177,641 shares from 30 October to 3 November 2026 at an average of $13.50 (Form 4 filed 3 November 2026). The second was 22,359 shares on 4 November 2026 at an average of $12.72 (Form 4 filed 6 November 2026).
The business case rests on margins. Third-quarter revenue rose 7% to $10.96 million, while adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation, excluding items the company adjusts out) rose to $3.89 million from $2.45 million (company release, 26 October 2026). Management guides 2026 adjusted EBITDA to $13.4–13.6 million.
Bullish and bearish views on AudioEye, Inc.
The bull case on AudioEye, Inc. (AEYE), in brief: GAAP profit arrived in the third quarter. The bear case: the executive chairman keeps selling.
Bull case
- GAAP profit arrived in the third quarter. Net income was $0.99 million, or $0.08 per diluted share, against a $0.55 million loss a year earlier (company release, 26 October 2026). Adjusted gross margin rose to 88% from 83%.
- Earnings guidance beat consensus. The 2026 adjusted earnings-per-share guide of at least $1.04 compares with a $0.98 consensus, and the fourth-quarter guide of $0.32–$0.33 compares with $0.30 (Benzinga, 26 October 2026).
- Recurring revenue keeps growing. Annual recurring revenue (ARR) reached $43.3 million on 30 September 2026, up 12% year over year (company release). The Form 10-Q counts about 130,000 customers on that date, up 6% from about 123,000.
- Cash generation improved. Operating cash flow for the first nine months of 2026 was $4.04 million, against $2.22 million a year earlier (Form 10-Q). Cash rose to $9.33 million on 30 September 2026 from $5.29 million on 31 December 2025.
- The lender loosened buyback terms. A loan modification dated 26 October 2026 removed the dollar cap on repurchases under the term loan (Form 10-Q). The board authorised up to $15 million of repurchases through 18 October 2027, announced on 20 October 2026.
- A director keeps buying. James Hawkins bought 3,000 shares at $12.34 on 29 October 2026, 4,000 at $13.15 on 30 October 2026 and 3,000 at $12.77 on 4 November 2026 (SEC Form 4 filings).
Bear case
- The executive chairman keeps selling. Moradi's sales ran from the $13.33–$14.16 range on 30 October 2026 and 3 November 2026 to a $12.72 average on 4 November 2026 (Form 4 filings). The 3 November 2026 form shows 1,771,966 shares held through Sero and 797,595 held directly after those sales, and it does not mark them as made under a Rule 10b5-1 pre-arranged plan.
- Sales growth is single-digit. Third-quarter revenue grew 7%. The 2026 sales guide narrowed to $43.6–$43.8 million from $43.5–$44.0 million, against a $43.619 million consensus, and the fourth-quarter sales guide is $11.4–$11.6 million (Benzinga, 26 October 2026).
- The buyback is authorised, not yet used. The company bought no shares under the new programme through 26 October 2026 and none under the prior one in the third quarter (Form 10-Q). Repurchases require no event of default and at least $5.0 million of liquidity afterward, and the $15 million authorisation exceeds the $9.33 million of cash on 30 September 2026.
- Debt exceeds cash. Term loan principal was $16.6 million on 30 September 2026, and stockholders' equity was $5.08 million. Covenants cap funded debt at 2.50 times adjusted EBITDA through 30 June 2027, then 2.00 times (Form 10-Q).
- Revenue is concentrated. Two customers accounted for 11% and 12% of third-quarter revenue (Form 10-Q).
- Litigation costs still weigh on GAAP results. Litigation expense was $3.40 million for the first nine months of 2026, against $1.94 million a year earlier, and the nine-month GAAP net loss was $1.99 million (company release, 26 October 2026).
Price setup
The shares closed at $12.89 on 4 November 2026, $12.06 on 5 November 2026, $12.37 on 6 November 2026, $12.96 on 9 November 2026, $13.67 on 10 November 2026 and $13.77 on 11 November 2026. The 52-week intraday high is $14.68, set on 30 October 2026, and the last close is 6.2% below it. The 52-week closing low is $5.40, on 24 March 2026.
The 50-day average of adjusted closes is $8.59 and the 200-day average is $7.27, both far under the last close. Benzinga reported the shares up 33.96% to $9.94 in the intraday session on 27 October 2026, the first session after the third-quarter report. The shares have since traded above that level on every close listed above.
The 52-week intraday high of $14.68 is the nearest level the case turns on. A close beyond it would extend the post-earnings move; a close back toward the 5 November 2026 low of $12.06 would show the buying fading.
With 12,684,577 shares outstanding on 26 October 2026 (Form 10-Q), modest volume can move the price sharply. The company announced on 12 November 2026 that it will take part in investor conferences in November.
Catalysts ahead
- ~5 March 2027 (est.): Q4 and full-year 2026 report. Tests whether adjusted EBITDA reaches the $13.4–13.6 million guide, Q4 revenue reaches the $11.4–11.6 million guide and ARR growth holds near 12%, and shows whether the company used the $15 million buyback.
What would change the view
A daily close above $16.52, over the $14.68 intraday high of 30 October 2026, which would show the shares leading the S&P 500. A fourth-quarter revenue result above the $11.6 million top of guidance would also show that.
What it trades with
AudioEye's move came from its own results and its buyback news, so the read depends little on software peers. The 27 October 2026 surge followed the company's own third-quarter report, with no sector news behind it. This view would be wrong if AudioEye's largest daily moves began tracking a software peer group on days with no company news.
The evidence, claim by claim (8)
- David Moradi reported selling 22,359 shares at an average of $12.72 on 4 November 2026, after 177,641 shares sold from 30 October to 3 November 2026 at an average of $13.50. SEC Form 4 filings for AudioEye, filed 3 November 2026 and 6 November 2026 · as of
- Q3 2026 revenue was $10.96 million, up 7% year over year from $10.23 million. AudioEye Q3 2026 earnings release · as of
- Q3 adjusted EBITDA was $3.89 million (35% margin), against $2.45 million (24%) a year earlier; GAAP net income was $0.99 million. AudioEye Q3 2026 earnings release · as of
- ARR was $43.3 million, up 12% year over year and up from $42.3 million at 30 June 2026. AudioEye Q3 2026 earnings release · as of
- 2026 guidance: adjusted EBITDA of $13.4–13.6 million, adjusted EPS of at least $1.04 and revenue of $43.6–43.8 million; Q4 sales guide $11.4–11.6 million. AudioEye Q3 2026 earnings release; Benzinga · as of
- Cash was $9.33 million against $16.6 million of term loan principal; nine-month operating cash flow was $4.04 million, up from $2.22 million a year earlier. AudioEye Q3 2026 Form 10-Q · as of
- No shares had been repurchased under the new $15 million programme through 26 October 2026, and none under the prior programme in the third quarter. AudioEye Q3 2026 Form 10-Q · as of
- Consensus target is $14.62 from six analysts: four Buy, one Hold, one Sell. The Cerbat Gem, 5 November 2026 · as of
Sources
- AUDIOEYE INC - Form 4 - FY2026 · sec.gov ·
- AUDIOEYE INC - Form 10-Q - FY2026 · sec.gov
- Audioeye (NASDAQ:AEYE) Stock: Insider David Moradi Sells 39,312 Shares · thecerbatgem.com ·
- AudioEye executive chairman Moradi sells $2.4M in shares at $13.33-$14.16 · investing.com
- Finviz
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