Saturday, August 25, 2012

Angie's List Stock Continues to Slide

On Monday, Forbes reported:
Angie’s List shares continue their astounding free fall in the wake of last week expiration of a post-IPO lock-up period. 
On August 14, all of the company’s outstanding share became freely trading. Until that time, 25.28 million of the company’s 57.76 million shares could not be traded in the open market. 
The expiration of lock-up agreements is hardly a new phenomenon, but the impact of those arrangements on Web 2.0 company stock prices has been considerable in recent weeks. Angie’s List shares, in particular, are down 26% over the last five days.
What makes this sort of thing so difficult to address is that this really isn’t about fundamentals; it is about supply and demand. If you flood the market with widgets, shares or bananas, their prices will fall. That’s what’s happening with Angie List – and it is what will continue to happen to Facebook as more shares reach the market.
Looking at the on-line stock market information for Angie's List,the company began its public life on November 17, 2011 with its stocks valued at $16.26.  On March 28, 2012, the stock reached its zenith at $18.91.  Today, the stock closed at $9.69 a share.


Gary R. Welsh said...

Angie's List has always been a Ponzi scheme. Anyone who invests money in the company should have their head examined. The stock will be trading below $1 and facing delisting within a year. The company will file for bankruptcy, and Angie and Bill will walk away with tens of millions of dollars and spend the rest of their lives laughing at how many fools are born every minute.

Unknown said...

At least they will leave behind some fixed up houses on the near eastside. If they're not too messed up inside, maybe some new residential opportunities will result.

I know said...


Right on!

Wasn't Bill the right hand man for the current Governor and his elections?

Gee another small part of that family tree that just keeps on giving.

When do the thieves in fancy clothes and public positions get their buts tarred and feathered and run out of town?

Gary R. Welsh said...

Did you see this article, Paul, entitled, "Angie's List CEO Proud of Losing Money,":

In an interview with USA Today that ran on Tuesday, August 14, 2012, Bill Oesterle, the Chief Executive Officer, stated that, "Sometimes, I start my presentations with that. When you think about it, it's not easy to do. Losing money for 17 years is hard. You have to continue to find people to supply capital to you."

Not surprisingly, Angie's List fell 15.95% in trading that day, losing $2.12 a share. In addition to the CEO interview, the lock-up period for investor shares expired the same day, too. Angie's List is now very close to its 52-week low of $10.77. It went public for $13 a share last November.

While the share price of Angie's List plunged, the short position has soared. The short interest for Angie's List is 7,616,800 shares. That is up from 6,714,800, an increase of 13.43%. That jump was registered before recent events, with a high short float already existing.

Although losing money for 17 consecutive years, 28 quarters, is bad enough, the trend is even worse. For the second quarter of 2012, Angie's List lost $23.4 million. That amount is an increase of 45% from Q2 2011.

For investors looking for a change: not gonna happen anytime soon. In the USA Today with Tony Cook, "Angie can't put making a profit on her List,"Oesterle promised this would continue as, "We are going to continue to invest in acquiring households and service companies so long as the unit economies continue to work. That means the cost of acquiring individual households leads to substantially greater return in the long run."

Based on financial statements, it is difficult to see that happening. As demonstrated by the plunge after the lock-up expiration, insiders are looking to bolt when possible. One analyst wrote about a recent secondary offering earlier in the year that: "The offering has ANGI only receiving $8.7 million of the overall funds with the rest of the 92.1% of proceeds going to a series of insiders including the CEO, the founder, other directors and early investors cashing out of their shares. In total, Officers and Directors of the company that are selling shares in the offering represent 4,234,381 shares, or 50.1% of the total shares sold in the offering. The balance, 42.0% is being sold by other early investors. For the individuals who are most familiar with the company to cash out to this degree is a major red flag which should be carefully considered by prospective or existing shareholders."

About that, Warren Buffet counseled that, "It's almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors)."

guy77money said...

Throw Groupon in the list of companies that will be worth next to nothing in the next year or to. The business model of Angie's List isn't a good one. I signed up as an early subscriber and wasn't impressed with the service.

Paul K. Ogden said...

Gary, no I did not see that. I did see Oesterle's quote in another article I read.

guy77money said...

As for Buffet Gary did you see where he exiting municipal bonds. Been reading quite a few articles lately where professional investors are predicting another recession. Keep an eye on those ETF's that short the stock market,you could make some big money. If Europe doesn't do away with the EURO and let each country go back to their own currency I suspect things won't get better over the pond.

Citizen Kane said...

Of course, the City had to help keep the Ponzi going to pumping money into this B.S. company. I too was an early subscriber (too my eternal shame) - about 15 years ago - and determined that they were worthless, and that I was better off using the BBB (who actually helped me recover approximately $2,000 from a shady plumber whereas Angie's List (while I was a subscriber) told me to basically F-off!