Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, local services review site Angie's List (Nasdaq: ANGI ) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Angie's List and see what CAPS investors are saying about the stock right now.
Angie's List facts
|Headquarters (Founded)||Indianapolis (1995)|
|Market Cap||$892.4 million|
|Industry||Internet software and services|
|Trailing-12-Month Revenue||$78.7 million|
|Management||Co-Founder/CEO William Oesterle
Co-Founder/Chief Marketing Officer Angela Hicks
|Trailing-12-Month Operating Margin||(58.5%)|
|Cash/Debt||$10.5 million / $14.8 million|
|Competitors||Google (Nasdaq: GOOG )
Microsoft (Nasdaq: MSFT )
Yahoo! (Nasdaq: YHOO )
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 98% of the 124 members who have rated Angie's List believe the stock will underperform the S&P 500 going forward. These bears include johnnykillz and All-Star TSIF, who is ranked in the top 0.5% of our community.
Late last week, johnnykillz touched on the stock's seemingly unsustainable valuation: "Never used this site and don't know anyone who does. And I was in the construction business for 7 years. What value is this thing bringing me?"
In fact, Angie's List currently sports an enterprise value-to-revenue multiple of 11.4. That represents a premium to listed rivals like Google (4.3), Microsoft (2.3), and Yahoo! (3.2).
CAPS All-Star TSIF elaborates on the bear case:
From a financial standpoint, it's highly questionable if Angie's List can garner enough subscriptions to ever make a profit. $62 Million in subscription revenues in the last 9 months is fairly impressive, but costs continue to mount. ...
Angie's List also has competition, and the competition is currently free which is a big win for anything Internet based that users aren't willing to pay for. How often you need unbiased reviews that you can't get for free has to be somewhat limited. ... YELP has fewer frills, but is free. Charging a subscription does give the impression of being unbiased, no lobbying, but I don't think most users of this type of service care enough about this to pay for it. Angie has a bit of an edge in that their service provides phone support. You'd better have superior customer service if you're paying for it! ...
I see limited growth opportunity unless they diversify and find some way to interest more city dwellers rather than mid-small town subscribers. I would expect, small float or not, to see Angie's List share price drop gradually over time, especially if YELP shows some bite to its own bark.
What do you think about Angie's List, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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