Why Angie's List Inc Stock Got Crushed

Is this meaningful? Or just another movement?

Jul 24, 2014 at 1:39PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of consumer-review website operator Angie's List Inc (NASDAQ:ANGI) plummeted 19% Thursday after its quarterly results and outlook missed Wall Street expectations.

So what: Angie's List shares have been walloped over the past year on concerns over rapidly rising costs, and Thursday's Q2 results -- net loss widened to $18.4 million from $14.3 million in the year-ago period -- coupled with downbeat guidance only reinforce those worries. While revenue and total paid memberships both jumped more than 30% over the year-ago period, company selling expenses spiked 38% while marketing costs increased 28%, prompting several analysts to downgrade the stock on increased skepticism over the business model. 

Now what: Management now sees Q3 revenue of $80.5 million-$82.5 million -- well below the consensus of $86.6 million -- with marketing expenses in the range of $20 million-$23 million. "While revenue growth in e-commerce was lower than expected, we continued to make progress against our strategy of enabling service providers and populating their stores with offers," CEO Bill Oesterle reassured investors. "We expect significant improvement in margin in the second half of the year and continue to see compelling opportunities for growth." When you couple the gale force competitive headwinds facing Angie's List with its still-lofty 30-plus forward P/E, I'd hold out for an even wider margin of safety before buying into that turnaround talk. 

1 way to profit from the stock market's biggest movers                               
Growth stocks pop and plunge on a daily basis, and weeding out the winners from the losers can seem daunting. The Motley Fool's Rule Breakers team can help. The team of analysts has uncovered high-growth stocks time after time, with Chipotle up more than 800% since its recommendation in 2007 and Baidu up a whopping 2,000% since its recommendation in 2006. Fortunately for you, the team believes it has found its next big winner. Click here for your copy of this timely report.


Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Baidu and Chipotle Mexican Grill. The Motley Fool owns shares of Baidu and Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers