Indianapolis-based Angie’s List's stock continued to tumble Thursday morning after an analyst downgraded the stock following a report that Internet giant eBay will test its own consumer-reviews site in the United Kingdom. Shares in Angie's List fell as much as 12 percent before rising slightly. They traded at $23.92 late in the morning, down nearly 10 percent.
Even though the company reported record second-quarter revenue Wednesday, Raymond James lowered its Angie's List outlook to "outperform" from "strong buy."
Angie's List on Wednesday said revenue rose to $59.2 million in the quarter ended June 30, a rise of 62 percent over the second quarter of 2012.As always Angie's List brags about increased revenue. But the bottom line is profits and in that area Angie's List is once again in the red: Angie's List has been in business for some 18 years, and made a profit, I believe, in just one quarter.
The company continued to lose money but the losses are getting smaller. The company lost $14.3 million, or 25 cents per share, compared to a loss of $23.4 million, or 41 cents per share, for the same quarter a year earlier.
Despite spending millions of dollars on national marketing, Angie's List has been facing growing competition in its niche by firms such as Yelp, Thumbtack and HomeAdvisor. Angie’s List, which arguably has more consumer reviews and leading-edge service scheduling via its website, has been perennially unprofitable since its founding in the 1990s. Much of its cash flow has gone to establishing a presence in new cities.
Earlier this year, IBJ reported on self-dealing by Angie's List CEO Bill Oesterle, namely Oesterle's formation of a company to buy up near eastside property for $2.625 million and then sell it to Angie's List for $6.25 which inflated purchase price was eased by by $4.6 million in taxpayers incentives. Although the IBJ article is not available on-line without a subscription, the Advance Indiana article discussing the IBJ article is.
The best bet on the stock market today is to short Angie's List stock. It is inevitable that the company, with an astonishingly long history of not making money, is going to collapse. The only question is when that collapse is going to happen.