Why Angie's List Shares Got Clipped

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What: Shares of review-based website Angie's List (Nasdaq: ANGI  ) were looking for a fix today, falling as much as 19% on what appeared to be a tandem play after Groupon's (Nasdaq: GRPN  ) earnings report came up short.

So what: Social media stocks were down across the board as Facebook (Nasdaq: FB  ) dropped 4% and Yelp (NYSE: YELP  ) fell 5%, while Groupon got hit the hardest with a 25% drop. Investors were particularly concerned with Groupon's slowing growth, which could signal general saturation on social media platforms. Still in the red after nearly 20 years, Angie's List is particularly susceptible to these concerns as it will need to grow its top line appreciably if it hopes to turn a profit. The company posted a disappointing earnings report of its own last week as net income dropped 44% to -$23.4 million for the quarter.

Now what: Of the recent social media stock IPOs, Angie's List is the worst in my opinion. The company is still a money pit after nearly two decades in business, and seems particularly vulnerable to Yelp, which offers free access as opposed to Angie's List's subscription-based model, and should therefore generate more content from its users.

If there's ever been a stock shouting "RUN" at investors, this is it.

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Fool contributor Jeremy Bowman holds no positions in the companies above. The Motley Fool owns shares of Facebook. Motley Fool newsletter services have recommended buying shares of Facebook. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On August 14, 2012, at 2:10 PM, EquityBull wrote:

    I cannot believe Angie's was even able to pull off an IPO. This was a suckers play with the investors and founders running off with the money. Classic 2000 bubble playbook.

    Well there is a way for those investors to make their money back. Short angie's until it goes bankrupt for a 100% gain. It has no place in today's competitive environment.

    More amazing is how much money they shred every quarter.

  • Report this Comment On August 14, 2012, at 5:48 PM, circaclown wrote:

    "Angie's List..falling as much as 19% on what appeared to be a tandem play after Groupon's (Nasdaq: GRPN ) earnings report came up short."

    It appears you don't know what you are talking about. Yeah Angie is a bum stock by all standards but it dropped because the lock up expired today

    http://www.bloomberg.com/news/2012-08-14/angie-s-list-plunge...

  • Report this Comment On August 16, 2012, at 9:55 AM, TMFBreakerRick wrote:

    circaclown, while you may be right about the lock-up expiration, you do realize that even the Bloomberg article that you're linking to points to the Groupon report that Jeremy mentions.

    "Angie’s List shares may be pulled down by the results of Groupon ..."

  • Report this Comment On August 17, 2012, at 7:18 PM, Morgana wrote:

    Angie's List: does not work. Had a nightmare of a stucco guy who won accolades on Angie's List.

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